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A firm is considering investing in a 15-year capital budgeting project with a net investment of...

A firm is considering investing in a 15-year capital budgeting project with a net investment of $14 million. The project is expected to generate annual net cash flows each year of $2 million and a terminal value at the end of the project of $10 million. The firm’s cost of capital is 9 percent and marginal tax rate is 40%. What is the profitability index of this investment?

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jeff jeffy answered 2 years ago
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