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You have to do a feasibility analysis of an investment knowing the following information: the initial cost of investment (I0) is 10.000 EUR and the

You have to do a feasibility analysis of an investment knowing the following information: the initial cost of investment (I0) is 10.000 EUR and the free cash flows that will be generated by the investment during the life time of three years of the investment are FCF1=2.000 EUR, FCF2=5.000 EUR, FCF3=6.000 EUR and residual value (RV3)=4.500 EUR. The opportunity cost of capital (k) is 10%. Estimate the Profitability Index(PI) and explain your decision regarding this investment using the given investment selection criterion.

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