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Unformatted text preview: 5,000,000 $1,927,716.45 Present value $18,758,930.79 Chapter 6 Question 14 Input area: Annual cash flows: I II Year 0 $(30,000) $(5,000) Year 1 $15,000 $2,800 Year 2 $15,000 $2,800 Year 3 $15,000 $2,800 Required return 10% Output area: Profitability index (I) 1.243 Profitability index (II) 1.393 The profitability index implies accept Project II NPV (I) $7,302.78 NPV (II) $1,963.19 NPV decision rule implies accept Project I Using the profitability index to compare mutually exclusive projects can be ambiguous when the magnitude of the cash flows for the two projects are of different scale....
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- Spring '09
- Future Value