You Are Considering Investing in a Piece of Equipment to Implement

You are considering investing in a piece of equipment to implement a cost-cutting proposal. The pre-tax cost reduction is expected to equal $41.67 for each of the three years of the project's life. The equipment has an initial cost of $125 and belongs in a 20% CCA class. Assume a 34% tax bracket, a discount rate of 15%, and a salvage value of zero.

If the equipment is sold to another company at the end of year 3 for $20, what is the PI?

A) 0.31
B) 0.46
C) 0.77
D) 1.09
E) 1.31