Question

Year Cash Flow 0 −$9,400           1 4,000           2 5,700           3 3,300      &nb

Year Cash Flow
0 −$9,400          
1 4,000          
2 5,700          
3 3,300          

  

a. What is the profitability index for the cash flows if the relevant discount rate is 8 percent?
  • 1.228
  • 1.252
  • 1.133
  • 1.157
  • 1.193

  

b. What is the profitability index for the cash flows if the relevant discount rate is 19 percent?
  • 0.994
  • 1.024
  • 1.044
  • 0.944
  • 0.964

  

c. What is the profitability index for the cash flows if the relevant discount rate is 24 percent?
  • 0.922
  • 0.949
  • 0.968
  • 0.876
  • 0.894

Homework Answers

Answer #1

a.Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)

=4000/1.08+5700/1.08^2+3300/1.08^3

=11210.1814

PI=Present value of inflows/Present value of outflows

=11210.1814/9400

=1.193(Approx)

b.Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)

=4000/1.19+5700/1.19^2+3300/1.19^3

=9344.75619

PI=Present value of inflows/Present value of outflows

=9344.75619/9400

=0.994(Approx)

c.Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)

=4000/1.24+5700/1.24^2+3300/1.24^3

=8663.69038

PI=Present value of inflows/Present value of outflows

=8663.69038/9400

=0.922(Approx)

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Year Cash Flow 0 −$8,400           1 3,900           2 3,300           3 5,800      &nb
Year Cash Flow 0 −$8,400           1 3,900           2 3,300           3 5,800              a. What is the profitability index for the cash flows if the relevant discount rate is 8 percent?    b. What is the profitability index for the cash flows if the relevant discount rate is 18 percent?    c. What is the profitability index for the cash flows if the relevant discount rate is 23 percent?
Year Cash Flow 0 −$9,100 1 5,300 2 5,700 3 4,900 a. What is the profitability...
Year Cash Flow 0 −$9,100 1 5,300 2 5,700 3 4,900 a. What is the profitability index for the cash flows if the relevant discount rate is 8 percent? b. What is the profitability index for the cash flows if the relevant discount rate is 19 percent? c. What is the profitability index for the cash flows if the relevant discount rate is 23 percent? Please be very specific in where you found each number
Year Cash Flow 0 −$7,200           1 5,300           2 5,700           3 5,300      &nb
Year Cash Flow 0 −$7,200           1 5,300           2 5,700           3 5,300              Required : (a) What is the profitability index for the cashflows if the relevant discount rate is 9 percent? (Click to select)$2.006$1.967$1.853$1.91$1.815    (b) What is the profitability index for the cashflows if the relevant discount rate is 17 percent? (Click to select)$1.617$1.584$1.717$1.75$1.667    (c) What is the profitability index for the cashflows if the relevant discount rate is 22 percent?
Year Cash Flow 0 −$9,600           1 4,800           2 3,100           3 4,400      &nb
Year Cash Flow 0 −$9,600           1 4,800           2 3,100           3 4,400              a. What is the profitability index for the cash flows if the relevant discount rate is 11 percent?    b. What is the profitability index for the cash flows if the relevant discount rate is 15 percent?    c. What is the profitability index for the cash flows if the relevant discount rate is 24 percent?
Year Cash Flow 0 −$8,400           1 5,600           2 3,600           3 5,100      &nb
Year Cash Flow 0 −$8,400           1 5,600           2 3,600           3 5,100              a. What is the profitability index for the cash flows if the relevant discount rate is 9 percent?    b. What is the profitability index for the cash flows if the relevant discount rate is 15 percent?    c. What is the profitability index for the cash flows if the relevant discount rate is 22 percent?
Year Cash Flow 0 −$7,800           1 4,300           2 5,200           3 3,200      &nb
Year Cash Flow 0 −$7,800           1 4,300           2 5,200           3 3,200              a. What is the profitability index for the cash flows if the relevant discount rate is 8 percent?    b. What is the profitability index for the cash flows if the relevant discount rate is 16 percent?    c. What is the profitability index for the cash flows if the relevant discount rate is 25 percent?
Year Cash Flow 0 −$7,600           1 3,200           2 4,300           3 2,400   &nb
Year Cash Flow 0 −$7,600           1 3,200           2 4,300           3 2,400              a. What is the profitability index for the cash flows if the relevant discount rate is 11 percent?    b. What is the profitability index for the cash flows if the relevant discount rate is 16 percent?    c. What is the profitability index for the cash flows if the relevant discount rate is 22 percent?
Year Cash Flow 0 −$7,700           1 4,200           2 4,300           3 4,500      &nb
Year Cash Flow 0 −$7,700           1 4,200           2 4,300           3 4,500              Required : (a) What is the profitability index for the cash flows if the relevant discount rate is 7 percent? (Click to select)$1.475$1.401$1.43$1.548$1.519    (b) What is the profitability index for the cashflows if the relevant discount rate is 18 percent? (Click to select)$1.182$1.219$1.158$1.28$1.256    (c) What is the profitability index for the cashflows if the relevant discount rate is 21 percent? (Click to...
Year 0 = Cash Flow -$16,700 Year 1 = Cash Flow $9,700 Year 2 = Cash...
Year 0 = Cash Flow -$16,700 Year 1 = Cash Flow $9,700 Year 2 = Cash Flow $7,800 Year 3 = Cash Flow $4,400 What is the profitability index for the set of cash flows if the relevant discount rate is 10 percent? What is the profitability index for the set of cash flows if the relevant discount rate is 15 percent? What is the profitability index for the set of cash flows if the relevant discount rate is 22...
Year Cash Flow 0 −$7,900 1 2,600 2 3,500 3 2,600 a. What is the profitability...
Year Cash Flow 0 −$7,900 1 2,600 2 3,500 3 2,600 a. What is the profitability index for the cash flows if the relevant discount rate is 8 percent? Multiple Choice 0.974 0.993 0.899 0.917 0.946 b. What is the profitability index for the cash flows if the relevant discount rate is 19 percent? Multiple Choice 0.785 0.808 0.824 0.745 0.761 c. What is the profitability index for the cash flows if the relevant discount rate is 22 percent? Multiple...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT