0 Darshan KadamIntermediate Asked: October 16, 20212021-10-16T23:48:30+05:30 2021-10-16T23:48:30+05:30In: 8.1 CFA Level 1 Cf 0 Q38 Share Sorry, you do not have permission to answer to this question. 3 Answers Oldest Ayushi Jain5 The Official Nerd 2021-10-17T00:22:38+05:30Added an answer on October 17, 2021 at 12:22 am Hi, PI= NPV/ initial investment To calculate NPV, go to the CF mode, Put CF1=115, F=6 CF2=115+50 F=1 Put the required rate as 10 and NPV comes=585.53 Now, PI= 585.53/375 PI= 1.56 Hope it helps! Darshan Kadam Intermediate 2021-10-17T21:21:07+05:30Replied to answer on October 17, 2021 at 9:21 pm Why don’t we have to put cf0 375€?? Like other sums Dhwani Motiani Asst. Mod. Asst. Moderator 2021-10-18T11:00:14+05:30Added an answer on October 18, 2021 at 11:00 am actually, the formula is NPV + Initial investment / Initial investment OR NPV of the inflows / Initial investment
Hi,
PI= NPV/ initial investment
To calculate NPV, go to the CF mode,
Put CF1=115, F=6
CF2=115+50 F=1
Put the required rate as 10 and NPV comes=585.53
Now, PI= 585.53/375
PI= 1.56
Hope it helps!
Why don’t we have to put cf0 375€?? Like other sums
actually, the formula is NPV + Initial investment / Initial investment
OR
NPV of the inflows / Initial investment