Hollister,Inc.is currently considering an eight-year project that has an initial outlay or cost of $120,000.The future cash inflows from its project for years 1 through 8 are the same at $30,000.Hollister has a discount rate of 11%.Because of capital rationing (shortage of funds for financing) ,Hollister wants to compute the profitability index (PI) for each project.What is the PI for Hollister's current project?
A) About 1.29
B) About 1.31
C) About 1.33
D) About 1.39
Correct Answer:
Verified
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