EBK CFIN
6th Edition
ISBN: 9781337671743
Author: BESLEY
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 8, Problem 7PROB
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What is the expected return of the following portfolio of investments,
Investment r Amount Invested
DEF 4% $30,000
JKL 24 25,000
TUV 14 45,000
Consider an investment with the following cash flows: Year Cashflows PV of P 1 @ 14% 0 (P 31,000) 1.000 1 10,000 .877 2 20,000 .770 3 10,000 .675 4 10,000 .592 Salvage value 5,000 The cost of capital is 14%. What is the profitability index (PI)?
1.842
1.824
1.482
1.284
Consider an investment with the following cash flows: Year Cashflows PV of P 1 @ 14% 0 (P 31,000) 1.000 1 10,000 .877 2 20,000 .770 3 10,000 .675 4 10,000 .592 Salvage value 5,000 The cost of capital is 14%. What is the profitability index (PI)? a. 1.842 b. 1.824 c. 1.482 d. 1.284
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