Assume that a company is considering purchasing a machine for $41,750 that will have a five-year useful life and no salvage value. The machine will lower operating costs by $17,000 per year. The company's required rate of return is 18%. The profitability index for this investment is closest to: Click here to viewExhibit 14B-1andExhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided.

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Multiple Choice

• 0.79.
• 1.23.
• 1.27.
• 1.33.