The following set of cash flows if the relevant discount rate is 10 percent. What if the

Question:

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? Find what the profitability index is for

YearCash Flow

0................................... ($28,000)

1.........................................15,700

2 ........................................13,200

4 ..........................................9,600

Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...