A company is planning an expansion the initial investment


A company is planning an expansion. The initial investment is $480,000 and anticipates cash inflows as listed below. The cost of capital is 12.2%. What is the profitability index and should the firm go ahead with the project?

 

Years

Cash Inflows

1

$90,000

2

105,000

3

105,000

4

195,000

5

195,000

6

195,000

 

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Finance Basics: A company is planning an expansion the initial investment
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