6. Birdman, Inc. is currently considering an eight-year project that has an initial outlay or cost of $80,000. The future cash inflows from its project for years 1 through 8 are the same at $30,000. Birdman has a discount rate of 13%. Because of concerns about funds being short to finance all good projects, Birdman wants to compute the profitability index (PI) for each project. What is the PI for Birdman's current project?

7. Washington Industries Inc. is considering a project that has an initial after-tax outlay or after-tax cost of $250,000. The respective future cash inflows from its five-year project for years 1 through 5 are $75,000 each year. Washington expects an additional cash outflow of $50,000 in the fifth year. What is Washington Industries Inc. internal rate of return using discount rates of 7% and 11%?

10. Rogue River, Inc. is considering a project that has an initial outlay or cost of $220,000. The respective future cash inflows from its four-year project for years 1 through 4 are $50,000, $60,000, $70,000, and $80,000, respectively. What is Rogue River's internal rate of return using discount rates of 5% and 8%?

Answer rating: 100% (QA)

To calculate the profitability index PI we divide the present value of the future cash inflows by th... View the full answer