Question
Problem 13-14 PI (LG13-6) Compute the PI statistic for Project Q if the appropriate cost of capital is 12 percent. (Do not round intermediate calculations and round your final answer to 2 decimal places.)
Explanation / Answer
Problem is incomplete, So I have founf from sources there problem have either cash flow so I I solved both the problem 1/(1+.12)^n Year(n) Cash Flow Disc Rate PV 0 -12800 1 -12,800 1 4250 0.892857 3,795 2 5080 0.797194 4,050 3 4970 0.71178 3,538 4 3050 0.635518 1,938 NPV 520 PI=(NPV+Initial Outflow)/Initial Outflow =(12800+520)/12800 1.04 Since PI 1.04>1, So project is acceptable 1/(1+.12)^n Year(n) Cash Flow Disc Rate PV 0 -11000 1 -11,000 1 3350 0.892857 2,991 2 4180 0.797194 3,332 3 1520 0.71178 1,082 4 2000 0.635518 1,271 NPV -2,324 PI=(NPV+Initial Outflow)/Initial Outflow =(11000-2324)/11000 0.79 Since PI0.79