What is the pi of a project if the initial costs are


Profitability Index Question

Gold Mining, Inc. is using the profitability index (PI) when evaluating projects. Gold Mining's cost of capital is 6.41 percent. What is the PI of a project if the initial costs are $1,603,850 and the project life is estimated as 8 years? The project will produce the same after-tax cash inflows of $648,690 per year at the end of the year.

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