Use the table for the question(s) below.
Consider the following two projects:
$\begin{array} { l c c c c c c }
\hline \text { Project } & \begin{array} { c }
\text { Year 0 } \
\text { Cash Flow }
\end{array} & \begin{array} { c }
\text { Year 1 } \
\text { Cash Flow }
\end{array} & \begin{array} { c }
\text { Year 2 } \
\text { Cash Flow }
\end{array} & \begin{array} { c }
\text { Year 3 } \
\text { Cash Flow }
\end{array} & \begin{array} { c }
\text { Year 4 } \
\text { Cash Flow }
\end{array} & \begin{array} { c }
\text { Discount } \
\text { Rate }
\end{array} \
\hline \mathrm { A } & - 100 & 40 & 50 & 60 & \text { N/A } & 0.15 \
\hline \mathrm { B } & - 73 & 30 & 30 & 30 & 30 & 0.15 \
\hline
\end{array}$
-The profitability index for project B is closest to?

Question

Use the table for the question(s) below.
Consider the following two projects:
$\begin{array} { l c c c c c c } 
\hline \text { Project } & \begin{array} { c } 
\text { Year 0 } \
\text { Cash Flow }
\end{array} & \begin{array} { c } 
\text { Year 1 } \
\text { Cash Flow }
\end{array} & \begin{array} { c } 
\text { Year 2 } \
\text { Cash Flow }
\end{array} & \begin{array} { c } 
\text { Year 3 } \
\text { Cash Flow }
\end{array} & \begin{array} { c } 
\text { Year 4 } \
\text { Cash Flow }
\end{array} & \begin{array} { c } 
\text { Discount } \
\text { Rate }
\end{array} \
\hline \mathrm { A } & - 100 & 40 & 50 & 60 & \text { N/A } & 0.15 \
\hline \mathrm { B } & - 73 & 30 & 30 & 30 & 30 & 0.15 \
\hline
\end{array}$
-The profitability index for project B is closest to?

Quizplus · Accepted Answer

The profitability index (PI) is calculated as the present value of future cash flows divided by the initial investment. For project B, the present value of cash flows is calculated using the discount rate of 0.15. The PI is closest to 0.17.

Use the Table for the Question(s) Below -The Profitability Index for Project B Is Closest To? A)

Use the Table for the Question(s) Below -The Profitability Index for Project B Is Closest To?
A)