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Compute the profitability index of project

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Reference no: EM132752701

Medium Size Mart, Inc. is considering a project with the following cash flows:

Initial cash outlay = $2,100,000

After-tax net operating cash flows for years 1 to 3 = $775,000 per year

Additional after-tax terminal cash flow at the end of year 3 = $700,000

Problem 1: Compute the profitability index of this project if Medium Mart's WACC is 10%.

Reference no: EM132752701

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