Explore BrainMass

Explore BrainMass

    Net present value and profitability index

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    Calculate the net present value and profitability index of a project with a net investment of $20,000 and expected net cash flows of $3,000 a year for 10 years if the project's required return is 12 percent. Is this project acceptable?

    © BrainMass Inc. brainmass.com June 3, 2020, 9:18 pm ad1c9bdddf
    https://brainmass.com/business/capital-budgeting/net-present-value-profitability-index-176082

    Solution Preview

    The NPV is calculated as
    PV of cash inflows - initial investment
    Since the cash inflows are an annuity, we use ...

    Solution Summary

    The solution explains how to calculate the net present value and profitability index and determine if the project should be accepted

    $2.19

    ADVERTISEMENT