Computing net present value-profitability index


A company is evaluating an investment project that costs $ 15,000 and will generate cash flow after taxes of $ 12,000 in the first year, 3,000 in the second year and $ 7,000 in the third year. The discount rate for the project is 15%. Calculate the net present value (NPV) and Profitability Index (PI) The investment project should be run. Explain why.

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Finance Basics: Computing net present value-profitability index
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