Blue Bay Ltd. has made an initial investment of R 500 000 in a new project....

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Blue Bay Ltd. has made an initial investment of R 500 000 in a new project. The firm's cost of capital is 12%. The investment is expected to generate the following cash inflows over the next five years: Year 1: R 50 000 Year 2: R 60 000 Year 3: R 150 000 Year 4: R 140 000 Year 5: R 500 000 The profitability index (PI) is ... ; therefore, the investment should ... a. 1.14; not be undertaken. X b. 1.29; not be undertaken. c. 1.14; be undertaken. d. 1.29; be undertaken. Finish review SH Blue Bay Ltd. has made an initial investment of R 500 000 in a new project. The firm's cost of capital is 12%. The investment is expected to generate the following cash inflows over the next five years: Year 1: R 50 000 Year 2: R 60 000 Year 3: R 150 000 Year 4: R 140 000 Year 5: R 500 000 The profitability index (PI) is ... ; therefore, the investment should ... a. 1.14; not be undertaken. X b. 1.29; not be undertaken. c. 1.14; be undertaken. d. 1.29; be undertaken. Finish review SH

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The profitability index PI also known as the profit investment ratio PIR or value investment ratio VIR is a capital budgeting technique calculated by ... View the full answer