The present value of the net cash flows was $92,000.
Given,
Project costing = $92000
Profitability index = 1
the discount rate was 12%
The profitability index (PI) quantifies the allure of a project or investment.
The present value of anticipated future cash flows is divided by the project's initial investment to determine the PI.
A PI of at least 1.0 is considered to be a decent investment, with higher levels indicating more alluring projects.
Using the Profitability index formula,
Profitability index = Net Present value of cash inflows / Initial Investment
1 = Present value of cash inflows / $92,000
Present value of cash inflows = $92,000
Hence, the present value of the net cash flows was $92,000.
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