This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
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....
View Full Document
This note was uploaded on 07/24/2009 for the course FIN FIN taught by Professor Robbani during the Spring '09 term at University of Maryland Baltimore.
- Spring '09
- Future Value