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What is the Profitability Index (PI) of this project if the required rate is 5%? Year      ...

What is the Profitability Index (PI) of this project if the required rate is 5%?

Year       CF
0          -$1614
1           $1673
2           $818
3           $694
4           $560
5           $720

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Answer #1

ANS 2.45

Year CF (I) DF@ 5% (ii) PV of CF ( (i) * (ii) )
1 1673 0.952 1593.33
2 818 0.907 741.95
3 694 0.864 599.50
4 560 0.823 460.71
5 720 0.784 564.14
Total of PV of Cash Inflows 3959.64
Total of PV of Cash Inflows 3959.64
Cash Outflows 1614
Profitability Index = 2.45
Present value of cash Inflow / Initial Investment (Cash Outflows) (3959.64 / 1614)
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