What is the PROFITABILITY INDEX for the planter project

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Question - Ms. Bark, the CEO of Osage Orange Corporation believes that the firm could create additional value by adding decorative wooden planters to its product mix. Machinery used in producing the planters would cost $15,200,000. According to Ms. Bark's projections, the subsequent net cash flows the company would generate for the investors if it entered the planter business would be $2,100,000 per year for 13 years. These are the only cash flows expected. The firm's annual weighted average cost of capital for a project of this type is 8.9%. What is the PROFITABILITY INDEX for the planter project?

Reference no: EM132956895

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