Profitability index. Given the discount rate and the future cash flow of each project listed in the following table, E , use the Pl to determine which projects the company should accept. ...... What is the Pl of project A? (Round to two decimal places.)

Profitability index. Given the discount rate and the future cash flow of each project listed in the following table, E , use the Pl to determine which projects the company should accept. ...... What is the Pl of project A? (Round to two decimal places.)

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter12: Capital Investment Analysis

Section: Chapter Questions

Problem 1CMA

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Question

Profitability index. Given the discount rate and the future cash flow of each project listed in the following table,
, use the PI to determine which projects the company should accept.
.....
What is the Pl of project A?
(Round to two decimal places.)

Cash Flow
Project A
Project B
- $1,800,000
- $2,500,000
$1,250,000
$1,050,000
Year 0
Year 1
$100,000
Year 2
$300,000
Year 3
$500,000
$850,000
Year 4
$650,000
$700,000
$900,000
Year 5
$450,000
Discount rate
5%
17%

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