A company is considering a new project that requires an initial investment of $150,000. The project is
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A company is considering a new project that requires an initial investment of $150,000. The project is expected to generate cash inflows of $40,000 per year for the next 5 years. After that, the project will have no residual value. The company's cost of capital is 12%. What is the profitability index (PI) of the project? Should the company invest in the project based on the PI criterion?
Related Book For
Principles Of Managerial Finance
ISBN: 978-0136119463
13th Edition
Authors: Lawrence J. Gitman, Chad J. Zutter
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