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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 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

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Profitability IndexProject 1Project 2Yearcash flowpresent .pdf

  • 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
  • 2. 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
  • 3. 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
  • 4. -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
  • 5. 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
  • 6. 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
  • 7. 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
  • 8. 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
  • 9. 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
  • 10. 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
  • 11. 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