A project requires an initial investment of $200,000 and has a profitability index of 0.250. The present value of the future cash inflows from this investment is:

Question

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The profitability index (PI) is calculated as the present value of future cash inflows divided by the initial investment. A PI of 0.250 means that the present value of future cash inflows is 0.250 times the initial investment of $200,000, which equals $50,000.

A Project Requires an Initial Investment of $200,000 and Has