Project B costs $800,000 and was found to have a NPV of $52,995 when using a WACC of 8.28%. Calculate the Productivity Index for Project B.
Ans 1.07
NPV = | Present value of cash inflows - cash outflows | ||||
52995= | Present value of cash inflows - 800000 | ||||
52995 + 800000 = | Present value of cash inflows | ||||
852995 = | Present value of cash inflows | ||||
Total of PV of Cash Inflows | 852995.00 | ||||
Cash Outflows | 800000 | ||||
Profitability Index = | 1.07 | ||||
Present value of cash Inflow / Initial Investment (Cash Outflows) | (852995 /800000) | ||||
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