Infocon, Inc. is planning to buy a suite of computers for its data center. The equipment will cost $22,500 and is expected to maintain the equipment at a cost of $6,250 per year. The equipment has a five-year expected life. The expected benefits from using the equipment are as shown. If the cost of capital is 10%, 

what is the profitability index of the project? 

What is the project value?: 

Year 0 Cost $22,500 Benefits $22,500; 

Year 1 Cost $6,250 Benefits $17,500; 

Year 2 Cost $6,250 Benefits $14,000; 

Year 3 Cost $6,250 Benefits $11,000;

Year 4 Cost $6,250 Benefits $5,000; 

Year 5 Cost $6,250 Benefits $0

Answer rating: 100% (QA)

SOLUTION To calculate the profitability index of the project we need to calculate the present value ... View the full answer