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Donaldson Mfg. is considering a capital budgeting project with a cost of capital of 10% and the following expected cash flow pattern: Time 0 1

Donaldson Mfg. is considering a capital budgeting project with a cost of capital of 10% and the following expected cash flow pattern:

Time 0 1 2 3 4 5
Cash flow -100 25 50 50 25 10

What is the profitabiity index of this project?

0.75

1.25

1.22

1.35

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