Profitability Index Project 1 Project 2 Year cash flow present value of cash inflow = cash flow/(1+r)^n r= 10% Year cash flow present value of cash inflow = cash flow/(1+r)^n r= 10% 0 -61000 -61000 0 -18300 -18300 1 34000 30909.09 1 9850 8954.545 2 34000 28099.17 2 9850 8140.496 3 34000 25544.7 3 9850 7400.451 sum of present value of cash flow 84552.97 sum of present value of cash flow 24495.49 sum of present value of cash outflow 61000 sum of present value of cash outflow 18300 profitability index sum of present value of cash inflow/cash outflow 1.386114 profitability index sum of present value of cash inflow/cash outflow 1.338551 Project Project 1 NPV Project 1 Project 2 Year cash flow present value of cash inflow = cash flow/(1+r)^n r= 10% Year cash flow present value of cash inflow = cash flow/(1+r)^n r= 10% 0 -61000 -61000 0 -18300 -18300 1 34000 30909.09 1 9850 8954.545 2 34000 28099.17 2 9850 8140.496 3 34000 25544.7 3 9850 7400.451 sum of present value of cash flow 84552.97 sum of present value of cash flow 24495.49 sum of present value of cash outflow 61000 sum of present value of cash outflow 18300 NPV sum of present value of cash inflow-cash outflow 23552.97 NPV sum of present value of cash inflow-cash outflow 6195.492 Project 1 Profitability Index Project 1 Project 2 Year cash flow present value of cash inflow = cash flow/(1+r)^n r= 10% Year cash flow present value of cash inflow = cash flow/(1+r)^n r= 10% 0 -61000 -61000 0 -18300 -18300 1 34000 30909.09 1 9850 8954.545 2 34000 28099.17 2 9850 8140.496 3 34000 25544.7 3 9850 7400.451 sum of present value of cash flow 84552.97 sum of present value of cash flow 24495.49 sum of present value of cash outflow 61000 sum of present value of cash outflow 18300 profitability index sum of present value of cash inflow/cash outflow 1.386114 profitability index sum of present value of cash inflow/cash outflow 1.338551 Project Project 1 NPV Project 1 Project 2 Year cash flow present value of cash inflow = cash flow/(1+r)^n r= 10% Year cash flow present value of cash inflow = cash flow/(1+r)^n r= 10% 0 -61000 -61000 0 -18300 -18300 1 34000 30909.09 1 9850 8954.545 2 34000 28099.17 2 9850 8140.496 3 34000 25544.7 3 9850 7400.451 sum of present value of cash flow 84552.97 sum of present value of cash flow 24495.49 sum of present value of cash outflow 61000 sum of present value of cash outflow 18300 NPV sum of present value of cash inflow-cash outflow 23552.97 NPV sum of present value of cash inflow-cash outflow 6195.492 Project 1 Solution Profitability Index Project 1 Project 2 Year cash flow present value of cash inflow = cash flow/(1+r)^n r= 10% Year cash flow present value of cash inflow = cash flow/(1+r)^n r= 10% 0 -61000 -61000 0 -18300 -18300 1 34000 30909.09 1 9850 8954.545 2 34000 28099.17 2 9850 8140.496 3 34000 25544.7 3 9850 7400.451 sum of present value of cash flow 84552.97 sum of present value of cash flow 24495.49 sum of present value of cash outflow 61000 sum of present value of ca.