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Compute the profitability index of the project

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Reference no: EM132850619

Question - OS Company is considering the purchase of a machine. Data are as follows:

Cost P100,000

Useful life 10 years

Annual straight-line depreciation P10,000

Expected annual savings in cash operating costs P18,000

Bonalos cutoff rate is 12%. Tax rate is 30%.

PV of an ordinary annuity of 1 at 12% for 10 periods is 5.65

Required - Compute the Profitability Index of the project?

Reference no: EM132850619

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