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You are offered an investment with returns of $ 1,317 in year 1, $ 3,869 in...

You are offered an investment with returns of $ 1,317 in year 1, $ 3,869 in year 2, and $ 5,674 in year 3. The investment will cost you $ 5,022 today. If the appropriate Cost of Capital (quoted interest rate) is 12.9 %, what is the Profitability Index of the investment? Enter your answer to the nearest .01. Do not use the $ sign or commas in your answer. If the NPV is negative, use the - sign.

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Answer #1

GIVEN

initial investment = 5022

Returns of first year = 1317

returns of second-year = 3869

returns of third year = 5674

Now calculate NPV of the returns -

(KINDLY UPVOTE AND COMMENT IF YOU LIKE MY ANSWER. THANKYOU.)

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