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Your company is considering a project with an initial outlay of $10,000 in year zero and the following cash flows over the next 4 years:

Your company is considering a project with an initial outlay of $10,000 in year zero and the following cash flows over the next 4 years:

Year

Cash flow

1

2,000

2

3,000

3

4,000

4

5,000

Assuming cost of capital is 11%.

2) The project's Profitability Index is:

0.89

2.23

1.60

1.05

1.00

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