help in homework

New User?

Fill This Form To Receive Instant Help

Help in Homework
trustpilot ratings
google ratings


Homework answers / question archive / What is the profitability index for an investment with the following cash flows given a discount rate of 11% and an initial investments of $19,400 ? year cash flow $0 2 $11,000 3 $12,000 a

What is the profitability index for an investment with the following cash flows given a discount rate of 11% and an initial investments of $19,400 ? year cash flow $0 2 $11,000 3 $12,000 a

Finance

What is the profitability index for an investment with the following cash flows given a discount rate of 11% and an initial investments of $19,400 ? year cash flow $0 2 $11,000 3 $12,000 a. 0,97 b.1.01 01.10

pur-new-sol

Purchase A New Answer

Custom new solution created by our subject matter experts

GET A QUOTE

Answer Preview

Answer is 1.01

Cash Flows:
Year 0 = -$19,400
Year 1 = $0
Year 2 = $11,000
Year 3 = $12,000

Discount Rate = 11%

Present Value of Cash Inflows = $0 + $11,000/1.11 + $12,000/1.11^2
Present Value of Cash Inflows = $19,649.3791

Profitability Index = Present Value of Cash Inflows / Initial Investment
Profitability Index = $19,649.3791 / $19,400
Profitability Index = 1.01

Sitejabber (5.0)

BBC (5.0)

Trustpilot (4.9)

Google (5.0)