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1. If the cost of capital is 10%, what is the Profitability Index (PI) of this...

1. If the cost of capital is 10%, what is the Profitability Index (PI) of this project and should be accepted or rejected? Year 0 1 2 3 4 5 6 Cash Flow ‐$1000 200 400 600 600 200 600 ‐.84, reject .84, reject .84, accept ‐.84, accept 2.67, accept

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Answer #1

Cash inflows are positive and .84 more than the cash outflow hence the projected should be accepted,

.84, accept

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