what will be the profitability index if the initial cash outflow was dollar 2000000 and the cash inflow for the 10 years are dollar 600000 and the cost of capital was 15%
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The profitability index is calculated by dividing the present value of future cash flows that will be generated by the project by the initial cost of the project. A profitability index of 1 indicates that the project will break even. If it is less than 1, the costs outweigh the benefits.
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