A project requires a net investment of $100,000.At the firm's cost of capital of 10%, the project's profitability index is 1.15.Determine the net present value of the project.
A)$15,000
B)$215,000
C)$115,000
D)none of these/cannot be determined

Question

Quizplus · Accepted Answer

PI = PV of NCF/NINV
1.15 = PV of NCF/$100,000
PV of NCF = $115,000
NPV = PV of NCF - NINV
= $115,000 - $100,000 = $15,000

A Project Requires a Net Investment of $100,000