13) Annual cash flows: CDMA Year 0 -18000 Year 1 15000 Year 2 9000 Year 3...

Question

Question

13)

	Annual cash flows:	CDMA
	Year 0	-18000
	Year 1	15000
	Year 2	9000
	Year 3	4000

	Required return	9%

Calculate Profitability Index?

business finance

Answer 1

Answer #1

Profitability Index = Present Value of Future Cash Flows / Initial Investment in the Project

Profitability Index = ($15,000/1.09 + $9,000/1.09² + $4,000/1.09³) / $18,000

Profitability Index = 1.36

Answer 2

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