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Question 12.PMCQ.10: (LO 3) The following information is available for a potentia...

(LO 3) The following information is available for a potential capital investment.

Initial investment $80,000
Salvage value 10,000
Net annual cash flow 14,820
Present value of net annual cash flows 98,112
Net present value 18,112
Useful life 10 years

The potential investment’s profitability index (rounded to two decimals) is:
a. 5.40.                                     c. 1.23.
b. 1.19.                                      d. 1.40.

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