Homework #6D (Profitability Index)

Homework #6D (Profitability Index)

Question 2 (1 point)

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.

Round the answer to two decimal places.