1. What is the profitability index of a project that has an initial cash outflow of $550, an inflow of $230 for the next 3 years and a cost of capital of 8 percent?
A. 
0.667 

B. 
1.765 

C. 
1.078 

D. 
2.739 
2.
What is the NPV for a project whose cost of capital is 12 percent and initial aftertax cost is $5,000,000 and is expected to provide aftertax operating cash inflows of $1,600,000 in year 1, $1,900,000 in year 2, $1,700,000 in year 3, and $1,500,000 in year 4?
A. 
$106,543 

B. 
$196,615 

C. 
$137,053 

D. 
$4,862,947 
1.Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)
=230/1.08+230/1.08^2+230/1.08^3
=592.732307
PI=Present value of inflows/Present value of outflows
=592.732307/550
=1.078(Approx)
2.Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)
=1,600,000/1.12+1,900,000/1.12^2+1,700,000/1.12^3+1,500,000/1.12^4
=5106543.33
NPV=Present value of inflowsPresent value of outflows
=5106543.335,000,000
=$106543(Approx).
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