Profitability Index
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Year Project A Project B
0 -$200 -200
1 82 100
2 80 100
3 80 100
4 80
Question 6: Profitability Index - If the opportunity cost of capital is 11 percent, what is the profitability index for each project? Does the profitability index rank the project incorrectly?
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As we know that,
Year Project A Project B Discount rate @11% PV of Cash Flows (project A) PV of Cash Flows (project ...
Education
- MBA, Indian Institute of Finance
- Bsc, Madras University
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