Tuesday 12 June 2012

Consider a project with the following cash flows: After-Tax After-Tax Accounting

 Consider a project with the following cash flows: After-Tax After-Tax Accounting Cash Flow Year Profits from Operations 1 $799 $ 750 2 $150 $1,000 3 $200 $1,200 Initial outlay = $1,500 Terminal cash flow = 0 Compute the profitability index if the company’s discount rate is 10%.
a. 15.8
b. 1.61
c. 1.81
d. 0.62
 

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