Your Firm Is Considering an Investment That Will Cost $920,000

Multiple Choice

Your firm is considering an investment that will cost $920,000 today.The investment will produce cash flows of $450,000 in year 1,$270,000 in years 2 through 4,and $200,000 in year 5.The discount rate that your firm uses for projects of this type is 11.25%.What is the investment's profitability index?

A) 1.21
B) 1.26
C) 1.43
D) 1.69