PV=PV of Inflows/Initial Investment

Average Accounting Rate of return

=Average Net Income/Average Book Vale

Project Cash Flows Initial Outlay

Initial Outlay=Investment in New Equipment+Working Capital Investment-Sale old equipment+(Sale old equipment-book value old equipment)(tax)

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Corporate Finance CF

Corporate Finance CFA II

Question	Answer
Profitability Index	PV=PV of Inflows/Initial Investment
Average Accounting Rate of return	=Average Net Income/Average Book Vale
Project Cash Flows Initial Outlay	Initial Outlay=Investment in New Equipment+Working Capital Investment-Sale old equipment+(Sale old equipment-book value old equipment)(tax)