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Your firm has limited capital to invest and is therefore interested in comparing projects based on the profitability index (PI), as well as other measures.
Your firm has limited capital to invest and is therefore interested in comparing projects based on the profitability index (PI), as well as other measures. What is the Pl of the project with the estimated cash flows below? The required rate of return is 18.8%. Round to 3 decimals Year 0 cash flow -760,000 Year 1 cash flow -150,000 Year 2 cash flow 430,000 Year 3 cash flow 380,000 Year 4 cash flow 520,000 Year 5 cash flow 410,000 Answer: Check A colleague asks for your help in finding the discount rate where the NPV-0 for a set of cash flows. You quickly recall that this is the IRR for a project. Answer in %, rounding to 2 decimals Year 0 cash flow -115,000 Year 1 cash flow 38,000 Year 2 cash flow 36,000 Year 3 cash flow 41,000 Year 4 cash flow 32,000 Answer: Check
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