Problem:
A firm is reviewing a project that has an initial cost of $71,000. The project will produce annual cash inflows, starting with year 1, of $8,000, $13,400, $18,600, $33,100 and finally in year five, $37,900.
Required:
Question: What is the profitability index if the discount rate is 11 percent?
Note: Please show how to work it out.