Title: Calculate Dr. Sharma's $100,000 Expansion ROI: Profitability Index Analysis Tagline: Dr. Anya Sharma's $15,000 Private Practice Expansion: Is the Profitability Index Promising Enough? Problem: Dr. Anya Sharma, a 35-year-old dermatologist, is considering expanding her private practice to include medical aesthetic services like Botox and laser treatments. The initial investment for equipment, training, and minor renovations is estimated at $100,000. Projected annual net cash inflows for the next 5 years are $30,000, $35,000, $40,000, $45,000, and $50,000 respectively. Dr. Sharma wants to determine if this expansion is a worthwhile investment given her required rate of return is 10%, especially since she's also aggressively paying off her $280,000 in student loan debt and maxing out her 401k. She needs a simple, reliable tool to calculate the Profitability Index and decide whether to proceed. Solution: By using the Profitability Index calculator, Dr. Sharma can quickly assess the viability of her expansion plans. The calculator will discount future cash flows to their present value, then divide by the initial investment. If the Profitability Index is greater than 1, the project is deemed acceptable, indicating that the present value of future cash flows exceeds the initial investment, making it a potentially profitable venture. ROI: Calculating a Profitability Index of 1.15 shows that the expansion project is worthwhile. The present value of the future cash flows ($115,000) is 15% higher than the initial investment of $100,000. This suggests a net present value (NPV) of $15,000, indicating the project is expected to generate a positive return exceeding her 10% required rate of return. If she proceeded without calculation, she could have missed a $15,000 opportunity. Description: Determine whether Dr. Sharma's proposed medical aesthetic services expansion warrants investment by calculating its Profitability Index. Quickly analyze net present value relative to initial investment for data-driven decisions. Category: Lead Gen