We compute the profitability index of a capital-budgeting proposal by:
A. dividing the present value of the annual after-tax cash flows by the cost of capital.
B. dividing the present value of the annual after-tax cash flows by the cost of the project.
C. multiplying the IRR by the cost of capital.
D. multiplying the cash inflow by the IRR.
A. dividing the present value of the annual after-tax cash flows by the cost of capital.
B. dividing the present value of the annual after-tax cash flows by the cost of the project.
C. multiplying the IRR by the cost of capital.
D. multiplying the cash inflow by the IRR.
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