# Calculating Profitability Index

What is the profitability index for the following set of cash flows if the relevant discount rate is 10 percent? What if the discount rate is 15 percent? If it is 22 percent?

Year Cash Flow

0 -$12,000

1 6,200

2 5,600

3 3,900

https://brainmass.com/economics/finance/calculating-profitability-index-304770

#### Solution Preview

At discount Rate of 10%

PV of initial cash outflow=12000

PV of future cash inflows =6200/(1+10%)+5600/(1+10%)^2+3900/(1+10%)^3=13194.59

PI =PV of cash ...

#### Solution Summary

Help is given with calculating profitability index.

$2.19