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Homework answers / question archive / Gold Mining, Inc

Gold Mining, Inc. is using the profitability index (PI) when evaluating projects. Gold Mining's cost of capital is 10.77 percent. What is the PI of a project if the initial costs are $2,182,275 and the project life is estimated as 6 years? The project will produce the same after-tax cash inflows of $442,241 per year at the end of the year. Round the answer to two decimal places. This set of problems is designed to be calculated using the Excel or financial calculator. Do not use financial tables to calculate these problems.

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