The following are the cash flows of an investment: Time 0, -$1,000,000,
Time 1, $550,000, Time 2, $400,000, Time 3, $325,000. The cost of
capital is 8%. Calculate the Profitability Index (PI) Ratio. Should the firm
accept the project and why? Use the method introduced in class to
calculate the PI Ratio.
0.1102, No, because the PI Ratio < 1
0.1102, Yes, because the PI Ratio > 0
0.1102, Yes, because the PI Ratio < 1
1.1102, No, because the PI Ratio > 1
1.1102, Yes, because the PI Ratio > 1