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Kathy has been presented with an investment opportunity which will yield end-of-year cash flows of $34,000 per year in Years 1 through 4, $40,000 per
Kathy has been presented with an investment opportunity which will yield end-of-year cash flows of $34,000 per year in Years 1 through 4, $40,000 per year in Years 5 through 9, and $48,000 in Year 10. This investment will cost the firm $260,000 today, and the firm's cost of capital is 5%. What is the profitability index for this investment?
Select one:
a. 1.48
b. 1.13
c. 1.36
d. 1.05
e. 0.91
f. 0.42
g. 0.48
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