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Compute the profitability index of project for hogwarts inc

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Reference no: EM132522821

Hogwarts Inc. is considering a project with the following cash flows:

Initial cash outlay = $2,500,000

After-tax net operating cash flows for years 1 to 4 = $779,000 per year

Additional after-tax terminal cash flow at the end of year 4 = $450,000

Question 1: Compute the profitability index of this project if Hogwarts' WACC is 11%.

Reference no: EM132522821

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