Question 1
What is the profitability index of a project that has a current cost of $100,000 and expected cash flows of $50,000 at the end of each of the next 7 years if the cost of capital is 20%?
◦ .001
◦ .018
◦ 1.80
◦ 1.18
◦ 1.25
Question 2
What is the Profitability Index of the Airbus A380 project? The Airbus A380 is the largest civilian aircraft ever built. It can carry 555 passengers on two decks. Initial project investments were $13B. Assume that the initial investment was paid on Dec 31, 2008. Assume that Airbus will produce 60 aircraft per year for five years. Each aircraft will be sold for $230M and total operating costs are 75% of revenues. Assume that revenues and costs occur at year-end with the first revenues (and costs) occurring on Dec 31, 2009. Assume that Airbus' cost of capital is 11%. Calculate the Profitability Index as of Dec 31, 2008. Assume that there are no terminal year cash flows.
◦ 0.935
◦ 0.981
◦ 0.995
◦ 1.333
◦ 1.981
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The Largest Refracting Telescope
Institute for Figuring, Crochet Coral Reef project.
Interpret CPT Index Conventions
Power-tower in Southern California, largest such facility in the world