FastTrack Bikes, Inc. is thinking of developing a new composite road bike. Development will take six years and the cost is $200,000 per year. Once in production, the bike is expected to make $300,000 (after expenses) per year for 10 years. The cash inflows begin at the end of year 7.

What is the profitability index or PI of the project?

Should the project be accepted or rejected based on PI and why?

Please show how you got PI. Thanks!