A project has a profitability index of 2.2, and the present value of cash outflows is $25 million. Find the net present value of this project, which is _____ million.

Question

BlackTom AI · Accepted Answer

We start by identifying what the profitability index (PI) means and what information we have.
- The PI is defined as PI = PV of inflows / PV of outflows. Here, PI = 2.2 and PV of outflows = 25 million.
- From this, we can calculate the PV of inflows: PV_inflows = PI × PV_outflows = 2.2 × 25 = 55 million.
- The net present value (NPV) is PV of inflows minus PV of outflows: NPV = PV_inflows − PV_outflows = 55 − 25 = 30 million.
Now compare the computed NPV (30 million) with the provided answer options.
- Option "$80": This would imply an NPV of 80 million, which is not supported by the calculation above since the PV_inflows would need to be 105 million, contradicting the given PI and outflows.
- Option "$22": This would require a different NPV value and does not align with PV_inflows = 55 million and PV_outflows = 25 million.
- Option "$30": This matches the calculated NPV (55 − 25 = 30), so it is the correct numerical result.
- Option "None of these": Since we have a valid value (30) among the options, this is incorrect.
- Option "$55": This would correspond to the PV of inflows, not the NPV, so it does not represent the NPV value.
Thus, the option that accurately reflects the NPV derived from the given PI and outflow PV is the one stating 30 million.

FA25-BL-BUS-F307-1134 Final Exam- Requires Respondus LockDown Browser

A project has a profitability index of 2.2, and the present value of cash outflows is $25 million. Find the net present value of this project, which is _____ million.

查看解析

登录即可查看完整答案

类似问题

Question at position 1 (3 marks, difficulty level: Easy) What is the NPV of this project? Assume the cost of capital is 9%. [table] Year | Project A 0 | -300,000 1 | 250,000 2 | 90,000 3 | 90,000 4 | 100,000 5 | 110,000 [/table]$205,873.92$216,940.48$234,156.78$228,454.01

Question at position 1 (3 marks, difficulty level: Easy) What is the NPV of this project? Assume the cost of capital is 9%. [table] Year | Project A 0 | -300,000 1 | 250,000 2 | 90,000 3 | 90,000 4 | 100,000 5 | 110,000 [/table]$228,454.01$216,940.48$205,873.92$234,156.78

Question at position 1 (3 marks, difficulty level: Easy) What is the NPV of this project? Assume the cost of capital is 9%. [table] Year | Project A 0 | -300,000 1 | 250,000 2 | 90,000 3 | 90,000 4 | 100,000 5 | 110,000 [/table]$216,940.48$234,156.78$205,873.92$228,454.01

更多留学生实用工具

考试浏览器助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

智能匹配练习

希望你的学习变得更简单