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A capital budgeting project requires an initial investment of $200,000 in year zero. The project produces annual cash flows of $65,000 for the next four years. The cost of capital is 10%. What is the profitability index (PI) and should the project be accepted?

a.
PI=1.10, Reject Project

b.
PI=1.10, Accept Project

c.
PI=1.03, Accept Project

d.
PI=1.03, Reject project

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