Question: MFG Inc. evaluates capital projects using the net present value, internal rate of return, and payback methods and ranks projects based on the profitability index.

MFG Inc. evaluates capital projects using the net present value, internal rate of return, and payback methods and ranks projects based on the profitability index. Project AAA has an IRR of 13.0%, a NPV of $127,500 and a time period 0 cash outflow of $750,000.

What is project AAA's profitability index?

Group of answer choices

1.15

1.0

1.17

1.25

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