The Mahan Corporation is considering an investment in a project that generates a profitability index of 1.3 . The present value of the cash inflows on the project is $44,000 . What is the net present value of this project?
a. $10,154
b. $13,200
c. $57,200
d. $33,846
A
PV Cash Inflows/Cash Outflows = Profitability Index
$44,000/Cash Outflows = 1.3
$44,000/1.3 = $33,846
PV Cash Inflows - Cash Outflows = Net Present Value
$44,000 - $33,846 = $10,154
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