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You are considering a project that has an initial outlay of $1 million. The profitability index...

You are considering a project that has an initial outlay of $1 million. The profitability index of the project is 2.24. What is the NPV of the project?
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Answer #1
NPV of the project $ 1.24 Million
Working:
a. Present Value of cash inflows = Initial Outlay x profitability index
= $ 1 Million x 2.24
= $       2.24 Million
b.
Present Value of cash inflows $       2.24 Million
Less: Initial Outlay $ 1 Million
NPV of the project $       1.24 Million
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