What is the profitability index of a project that costs $60,000 today and is expected to generate annual cash inflows of $10,000 for the next 8 years, followed by a final inflow of $12,000 in year 9? Cost of capital is 9%.
a) 0.80 |
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b) 0.87 |
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c) 0.94 |
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d) 1.01 |
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e) 1.10 |
Ans d) 1.01
The profitability index of a project that costs $60,000 today and is expected to generate annual cash inflows of $10,000 for the next 8 years, followed by a final inflow of $12,000 in year 9 is 1.01
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