Calculate the Profitability index of the project from the following details. egin{tabular}{|r|r|} hline Year & Cashflows ($) \ hline 0 & ( -883,000 ) \ hline 1 & 150,000 \ hline 2 & 243,690 \ hline 3 & 115,800 \ hline 4 & 301,650 \ hline 5 & 121,480 \ hline 6 & 88,600 \ hline 7 & 29,400 \ hline 8 & 6,800 \ hline end{tabular} The discount rate is ( 12.5 % ).
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The formula for present value is: PV = CF / (1 + r)^n where: - PV is the present value - CF is the cash flow - r is the discount rate - n is the number of periods Let's calculate the present value for each year: Year 0: PV = -883,000 / (1 + 0.125)^0 = Show more…
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