Question

A project has an initial outlay of $1,140. It has a single payoff at the end...

A project has an initial outlay of $1,140. It has a single payoff at the end of year 3 of $8,012. What is the profitability index (PI) of the project, if the company’s cost of capital is 13.17 percent?

Round the answer to two decimal places.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Profitability Index = Present Value of future cashflow/Initial Investment
Initial Investment = $1140
Present Value of $8012 received at the end of 3rd year discounted at 13.17% = $8012/(1.1317^3)
= $5527.73
Therefore,
Profitability Index = $5527.73/$1140
                 = 4.85 times
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
A project has an initial outlay of $3,451. It has a single payoff at the end...
A project has an initial outlay of $3,451. It has a single payoff at the end of year 6 of $8,155. What is the profitability index (PI) of the project, if the company’s cost of capital is 6.89 percent? Round the answer to two decimal places. how do i do this in excel? What formula do i use?
A project has an initial outlay of $2,038. It has a single payoff at the end...
A project has an initial outlay of $2,038. It has a single payoff at the end of year 9 of $7,559. What is the net present value (NPV) of the project if the company’s cost of capital is 10.19 percent? Round the answer to two decimal places.
6B4 A project has an initial outlay of $3,480. It has a single payoff at the...
6B4 A project has an initial outlay of $3,480. It has a single payoff at the end of year 3 of $9,922. What is the net present value (NPV) of the project if the company’s cost of capital is 11.97 percent? 6C4 Find the modified internal rate of return (MIRR) for the following series of future cash flows if the company is able to reinvest cash flows received from the project at an annual rate of 11.59 percent.The initial outlay...
6c1 A project has an initial outlay of $2,154. It has a single cash flow at...
6c1 A project has an initial outlay of $2,154. It has a single cash flow at the end of year 8 of $4,834. What is the internal rate of return (IRR) for the project? Round the answer to two decimal places in percentage form. (Write the percentage sign in the "units" box) 6b1 Find the net present value (NPV) for the following series of future cash flows, assuming the company’s cost of capital is 14.71 percent. The initial outlay is...
A project has an initial outlay of $1,384. It has a single cash flow at the...
A project has an initial outlay of $1,384. It has a single cash flow at the end of year 8 of $5,106. What is the internal rate of return (IRR) for the project? Round the answer to two decimal places in percentage form.
1. A project has an initial outlay of $1,732. The project will generate annual cash flows...
1. A project has an initial outlay of $1,732. The project will generate annual cash flows of $783 over the 4-year life of the project and terminal cash flows of $258 in the last year of the project. If the required rate of return on the project is 4%, what is the net present value (NPV) of the project? Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. 2.A...
Profitability Index A project has an initial cost of $73,575, expected net cash inflows of $14,000...
Profitability Index A project has an initial cost of $73,575, expected net cash inflows of $14,000 per year for 9 years, and a cost of capital of 8%. What is the project's PI? Do not round your intermediate calculations. Round your answer to two decimal places.
MIRR A project has an initial cost of $48,025, expected net cash inflows of $8,000 per...
MIRR A project has an initial cost of $48,025, expected net cash inflows of $8,000 per year for 12 years, and a cost of capital of 13%. What is the project's MIRR? Do not round intermediate calculations. Round your answer to two decimal places. Profitability Index A project has an initial cost of $45,950, expected net cash inflows of $13,000 per year for 10 years, and a cost of capital of 12%. What is the project's PI? Do not round...
Profitability Index A project has an initial cost of $55,075, expected net cash inflows of $15,000...
Profitability Index A project has an initial cost of $55,075, expected net cash inflows of $15,000 per year for 12 years, and a cost of capital of 8%. What is the project's PI? (Hint: Begin by constructing a time line.) Do not round intermediate calculations. Round your answer to two decimal places.
A project has an initial investment of $203,700 and will generate 5 annual cash flows of...
A project has an initial investment of $203,700 and will generate 5 annual cash flows of $59,800. Assume a cost of capital of 15.1 % Calculate the profitability index​ (PI). The present value of the cash inflows is ​$___. ​(Round to the nearest​ cent.) The profitability index is ___. ​(Round to two decimal​ places.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT