Question

Project B costs $800,000 and was found to have a NPV of $52,995 when using a...

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.

Homework Answers

Answer #1

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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