Question: Your firm has limited capital to invest and is therefore interested in comparing projects based on the profitability index (PI), as well as other measures.

Your firm has limited capital to invest and is therefore interested in comparing projects based on the profitability index (PI), as well as other measures. What is the PI of the project with the estimated cash flows below? The required rate of return is 16.0%. Round to 3 decimals. Year 0 cash flow = -950,000 Year 1 cash flow = -180,000 Year 2 cash flow = 370,000 Year 3 cash flow = 390,000 Year 4 cash flow = 510,000 Year 5 cash flow = 550,000

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