Your firm is considering an investment that will cost, Financial Management

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Your firm is considering an investment that will cost

Your firm is considering an investment that will cost $920,000 today. The investment will produce cash flows of $450,000 in year 1, $270,000 in years 2 through 4, and $200,000 in year 5. The discount rate that your firm uses for projects of this type is 11.25%. What is the investment’s profitability index?

a. 1.26

b. 1.69

c. 1.21

d. 1.43

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Financial Management: Your firm is considering an investment that will cost

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