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The firm is considering the purchase of a new device that costs 6,000. Assume a required rate of return of 12% and the following cash

The firm is considering the purchase of a new device that costs 6,000. Assume a required rate of return of 12% and the following cash flow schedule:

Year 1 3,000

Year 2 2,000

Year 3 2,000

1.Calculate the profitability index of the investment project.

2.Would the acceptance of the project result in added value for the firm? Explain.

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