Respuesta :
Profitability Index at 10% = 1.12
Profitability Index at 15% = 1.04
Profitability Index at 22% = 0.94
- Profitability index :
Profitability Index at 10%
PI = PV of future cash flows / investment, investment = $17200
PV = (9500/(1+0.1)) + (8400/(1+0.1)^2 + 4900/(1+0.1)^3
= 8636.37 + 6942.15 + 3681.44
= 19259.97
So, PI = 19259.97/17200 = 1.119 or 1.12%
Profitability Index at 15%
PV = (9500/(1+0.15)) + (8400/(1+0.15)^2 + 4900/(1+0.15)^3
= 8260.84 + 6351.61 + 3221.83
So, PI = 17834.3/17200 = 1.037 or 1.04%
Profitability Index at 22%
PV = (9500/(1+0.22)) + (8400/(1+0.22)^2 + 4900/(1+0.22)^3
=7786.89 + 5643.64 + 2698.46
=16128.994
So, PI = 16128.944/17200 = 0.938 or 0.94%
To know more about profitability index, kindly click on the link below :
https://brainly.com/question/28319517?referrer=searchResults
#SPJ4
- The complete question is :
Year Cash Flow
0 -$ 17,200
1 9,500
2 8,400
3 4,900
- What is the profitability index for the set of cash flows if the relevant discount rate is 10 percent? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)
- What is the profitability index for the set of cash flows if the relevant discount rate is 15 percent? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)
- What is the profitability index for the set of cash flows if the relevant discount rate is 22 percent? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)
