A project has an initial cost of $63,400, expected net cash inflows of $8,000 per year for 11 years, and a cost of capital of 14%. What is the project's PI? Do not round your intermediate calculations. Round your answer to two decimal places.
Profitability Index is calculated using the below formula:
Profitability Index= NPV + Initial investment/ Initial investment
Net present value can be solved using a financial calculator. The steps to solve on the financial calculator:
Net present value at 14% cost of capital is -$19,778.14.
Profitability Index= -$19,778.14 + $63,400/ $63,400
= $43,621.86 / $63,400
In case of any query, kindly comment on the solution.
Get Answers For Free
Most questions answered within 1 hours.