Find the profitability index (PI) for the following series of future cash flows, assuming the company’s cost of capital is 8.60 percent. The initial outlay is $306,089.
Year 1: $189,014
Year 2: $158,738
Year 3: $194,863
Year 4: $130,604
Year 5: $167,723
Round the answer to two decimal places.
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the profitability index (PI) = PV of future cash flows/ initial investment
Year 0: ($306,089)
PI= $359,613.10/$306,089 = 1.17
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