What is the profitability index of this investment

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Reference no: EM132044817

Elektrik Entertainment is looking to start a new music venue. They figure it will require an initial investment of $400,000 to open. In the first three years of operation the venue is expected to bring in after-tax net cash flows of $200,000 in year 1, $350,000 in year 2, and $50,000 in year 3. There is a required rate of return of 8% on this investment and a reinvestment rate of 8%. What is the profitability index of this investment?

Reference no: EM132044817

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