Using profitability index when evaluating projects

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Gold Mining, Inc. is using the profitability index (PI) when evaluating projects. Gold Mining’s cost of capital is 5.41 percent. What is the PI of a project if the initial costs are $2,457,480 and the project life is estimated as 5 years? The project will produce the same after-tax cash inflows of $467,727 per year at the end of the year.

Reference no: EM131084266

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Using profitability index when evaluating projects : Gold Mining, Inc. is using the profitability index (PI) when evaluating projects. Gold Mining’s cost of capital is 5.41 percent. What is the PI of a project if the initial costs are $2,457,480 and the project life is estimated as 5 years? The project..

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