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so it has given the answer and I am aware that profitability index = NPV/initial investment but how would you incorporate discount value to get
so it has given the answer and I am aware that profitability index = NPV/initial investment but how would you incorporate discount value to get the answer as I am a bit confused and cant get the answer
Consider an investment proposal with the following characteristics. Initial investment: (25,000) Year 1 cash flows: 7,500 Year 2 cash flows: {6,000 Year 3 cash flows: 5,000 Year 4 cash flows: 5,500 Year 5 cash flows: 6,500 Discount rate: 14% Using present values what is the profitability index for this project? ABCD1.0200.0.8481.0.9382.0.9783. B (PV(0.14,7500,6000,5000,5500,6500))/25,000=0.8481Step by Step Solution
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