Biogen Inc. is considering a capital expansion project. The initial investment of undertaking this project is $238,200. This expansion project will last for five years. The net operating cash flows from the expansion project at the end of year 1, 2, 3, 4 and 5 are estimated to be $42,350, $47,024, $94,752, $82,512 and $120,456 respectively.

Biogen has a weighted average cost of capital of 28%.

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Based on Biogen's weighted average cost of capital, what is the profitability index (PI)of undertaking this project? That is, what is the profitability index if the weighted average cost of capital is used as the discount rate? Shall Biogen undertake the investment project? Question 16 options:

PI=1.63. Biogen shall undertake the investment project since PI>1.

PI=0.79. Biogen shall not undertake the investment project since PI<1.

PI=1.13. Biogen shall undertake the investment project since PI>1.

PI= 0.73. Biogen shall not undertake the investment project since PI<1.