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A firm is considering an investment project with the following cash flows: Year 0 = -$120,000 (initial costs); Year 1= $40,000; Year 2 =$90,000; and

A firm is considering an investment project with the following cash flows:

Year 0 = -$120,000 (initial costs);

Year 1= $40,000;

Year 2 =$90,000; and

Year 3 = $30,000.

The company has a 9% cost of capital. What is the project’s profitability index (PI)?

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