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The following are the cash flows of two projects: Year 0 1 2 3 4 Project A $ (280) 160 160 160 160 Project
The following are the cash flows of two projects: Year 0 1 2 3 4 Project A $ (280) 160 160 160 160 Project B $ (280) 180 180 180 If the opportunity cost of capital is 10%, what is the profitability index for each project? Note: Do not round intermediate calculations. Round your answers to 4 decimal places. Project A B > Answer is complete but not entirely correct. Profitability Index X 1.5987 x
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To calculate the profitability index for each project we need to find the present value of cash flows and then divide it by the initial investment Given Opportunity cost of capital 10 Initial investment Year 0 cash flow ...
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Financial Management Theory and Practice
Authors: Eugene F. Brigham, Michael C. Ehrhardt
15th edition
130563229X, 978-1305632301, 1305632303, 978-0357685877, 978-1305886902, 1305886909, 978-1305632295
