A project has a profitability index of 1.325. The project also has a future cash flows of $21,350 and an internal rate of 12%. What was the initial investment?

Name: A project has a profitability index of 1.325. The project also has a future cash flows of $21,350 and an internal rate of 12%. What was the initial investment?
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Question

Quizplus · Accepted Answer

$21,350 ÷ x = 1.325; x = $16,113
(Present Value of net cash flows ÷ initial investment (x) = Profitability index

A Project Has a Profitability Index of 1