question archive Find the profitability index (PI) for the following series of future cash flows, assuming the company's cost of capital is 10
Find the profitability index (PI) for the following series of future cash flows, assuming the company's cost of capital is 10
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Find the profitability index (PI) for the following series of future cash flows, assuming the company's cost of capital is 10.45 percent. The initial outlay is $438,216.
Year 1: $131,465
Year 2: $192,840
Year 3: $161,598
Year 4: $174,895
Year 5: $158,448
Round the answer to two decimal places.
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Profitability index = 1.39
Step-by-step explanation
Profitability index = Present value of cash inflow /Initial Investment
= $610,952.20/$438,216
= 1.394180495 or 1.39
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