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What is the Profitability Index (PI) of this project if the required rate is 15%? Year      ...

What is the Profitability Index (PI) of this project if the required rate is 15%?

Year       CF
0          -$3791
1           $1240
2           $851
3           $1065
4           $625
5           $621

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Answer #1

Ans 0.81

Year Project A (i) DF@ 15% (ii) PV of Project A ( (i) * (ii) )
1 1240 0.870 1078.26
2 851 0.756 643.48
3 1065 0.658 700.25
4 625 0.572 357.35
5 621 0.497 308.75
NPV 3088.09
Total of PV of Cash Inflows 3088.09
Cash Outflows 3791
Profitability Index = 0.81
Present value of cash Inflow / Initial Investment (Cash Outflows) (3088.09 / 3791)
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