In: Finance
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 = $600,000
Compute the profitability index of this project if Medium Mart’s WACC is 10%. Enter your answer rounded to two decimal places. For example, if your answer is 123.45% or 1.2345 then enter as 1.23 in the answer box.