For project Gemini of Space Company the net investment was be $400,000. The net present value of all future net cash inflows was $800,000. The company's tax rate is 40 percent. The profitability index was

Question

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The profitability index is calculated by dividing the net present value (NPV) of future cash inflows by the initial investment. Here, the NPV is $800,000 and the initial investment is $400,000. Thus, the profitability index is $800,000 / $400,000 = 2.00.

For Project Gemini of Space Company the Net Investment Was