Based on the profitability index and the initial outlay of the project, the NPV of the project is $2.304 million
What is the project's NPV?
The Profitability index is found by the formula:
Pi = 1 + NPV / Initial outlay
Solving for the NPV gives:
2.44 = 1 + NPV / 1.6 million
NPV / 1.6 million = 2.44 - 1
NPV = 1.44 x 1.6 million
= $2.304 million
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