Gain the trust of your customers with a well designed and fr

Gain the trust of your customers with a well- designed and fresh looking showroom. The C.H.I. Storefront offers everything you need to put together February 2018 Su M Tu W Th Sa New Tab Secure l https://newconnect.mheducation.com/flow/connect.html ting Started O Secure Login Chase Imported From Firefo eek 3 Homework: Chapter 7- Net Present Value and Oth... 5 Bill plans to open a self-serve grooming center in a storefront. The grooming equipment will cost $480,000. Bill expects aftertax cash inflows of $103,000 annually for eight years, after which he plans to scrap the equipment and retire to the beaches of Nevis. The first cash inflow occurs at the end of the first year. Assume the required return is 13 percent. 10 points What is the project\'s profitability index (PI)? (Do not round intermediate calculations and round your answer to 3 decimal pl e.9., 32.161) Pl eBook Print References Should the project be accepted? Yes No

Solution

Present value of annual cash inflows = 103000*4.79877= 494273 PI = 494273/480000= 1.030 Yes, it should be accepted