Chapter10: The Basics Of Capital Budgeting: Evaluating Cash Flows
Section10.6: Profitability Index (pi)
Problem 2ST
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Question
Vu Trading Company is evaluating a project that has the estimated cash flows given here. The cost of capital is 14%.
- What is the project’s
NPV ? b. What is the profitability index?
Year 0 1 2 3 4
Cash flow −100,000 30,000 30,000 60,000 60,000
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