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Suppose you are given the following two projects A and B with the cash flows below,...

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Finance

Suppose you are given the following two projects A and B withthe cash flows below, if the cost of capital is 10%, what is theProfitability Index (PI) of projects A and B?

YearProject AProject B
0-5000-6000
115001500
220002500
330004000
435004000

Answer & Explanation Solved by verified expert
4.4 Ratings (835 Votes)
Profitability Index PI for ProjectA Year Annual cash flows Present Value factor at 10 Present Value of Annual cash flows 1 1500 0909091 136364 2 2000    See Answer
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