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Consider a project with the following cash flows: After-Tax After-Tax
Accounting Cash Flow
Year Profits from Operations
1 $799 $750
2 $150 $1,000
3 $200 $1,200
Initial outlay = $1,500
Terminal cash flow = 0
Compute the profitability index if the company's discount rate is 10%.
Effective
In force or operational; commonly refers to the date on which a law, regulation, or agreement is applied or becomes operational.
Secured
Pertaining to a loan or obligation that is backed by collateral to reduce the risk of lending.
Security Interest
A legal claim or liens on property as collateral for the payment of a debt or performance of some other obligation.
Personal Property
Movable assets or belongings, excluding real estate and buildings, owned by an individual or entity.
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