A firm is considering a project that has an upfront cost of $250,000. The project is expected to generate zero cash flow in the first three years. Beginning in year 4, the project is expected too generate $35,000 a year, each year, forever. The discount rate for the project is 12% per year compounded annually. What is the profitability index for this project?

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To calculate the profitability index for the project we need to determine the present value of the c... View the full answer