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A project has an initial cost of $49,125, expected net cash inflows of $10,000 per year...

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Finance

A project has an initial cost of $49,125, expected net cashinflows of $10,000 per year for 10 years, and a cost of capital of13%. What is the project's PI? Do not round your intermediatecalculations. Round your answer to two decimal places. Pls show allsteps

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3.8 Ratings (700 Votes)

Ans 1.10

Year Project Cash Flows (i) DF@ 13% DF@ 13% (ii) PV of Project ( (i) * (ii) )
1 10000 1/((1+13%)^1) 0.885                       8,849.56
2 10000 1/((1+13%)^2) 0.783                       7,831.47
3 10000 1/((1+13%)^3) 0.693                       6,930.50
4 10000 1/((1+13%)^4) 0.613                       6,133.19
5 10000 1/((1+13%)^5) 0.543                       5,427.60
6 10000 1/((1+13%)^6) 0.480                       4,803.19
7 10000 1/((1+13%)^7) 0.425                       4,250.61
8 10000 1/((1+13%)^8) 0.376                       3,761.60
9 10000 1/((1+13%)^9) 0.333                       3,328.85
10 10000 1/((1+13%)^10) 0.295                       2,945.88
PV                     54,262.43
Total of PV of Cash Inflows 54262.43
Cash Outflows 49125
Profitability Index = 1.10
Present value of cash Inflow / Initial Investment (Cash Outflows) (54262.43 / 49125)

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A project has an initial cost of $49,125, expected net cashinflows of $10,000 per year for 10 years, and a cost of capital of13%. What is the project's PI? Do not round your intermediatecalculations. Round your answer to two decimal places. Pls show allsteps

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