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QUESTION

Dizzyland Enterprises has been presented with an investment opportunity which will yield end-of-year cash flows of $36,000 per year in Years 1

Dizzyland Enterprises has been presented with an investment opportunity which will yield end-of-year cash flows of $36,000 per year in Years 1 through 4, $40,000 per year in Years 5 through 9, and $47,000 in Year 10. This investment will cost the firm $280,000 today, and the firm's cost of capital is 6%. What is the profitability index for this investment?

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