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POD has a project with the following cash flows: Year Cash Flows 0 ?$263,000 1 146,400...

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Finance

POD has a project with the following cash flows: Year Cash Flows0 ?$263,000 1 146,400 2 163,900 3 129,000 The required return is9.2 percent. What is the profitability index for this project?

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3.7 Ratings (347 Votes)

year CF PVIF @ 9.2% present value
0 -263000     1.0000             (263,000)
1 146400     0.9158              134,066
2 163900     0.8386              137,446
3 129000     0.7679                 99,065
             107,578
Profitability index = (263000+107578)/263000
                    1.41
therefore answer =                     1.41

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POD has a project with the following cash flows: Year Cash Flows0 ?$263,000 1 146,400 2 163,900 3 129,000 The required return is9.2 percent. What is the profitability index for this project?

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