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Birdman,Inc.is currently considering an eight-year project that has an initial outlay or cost of $80,000.The future cash inflows from its project for years 1 through 8 are the same at $30,000.Birdman has a discount rate of 13%.Because of concerns about funds being short to finance all good projects,Birdman wants to compute the profitability index (PI) for each project.What is the PI for Birdman's current project?
Predetermined Overhead Rate
A rate used to allocate manufacturing overhead to individual products or job orders, based on estimated costs.
Machine-Hours
An indicator of the duration a machine is in use over a specific timeframe.
Selling Price
The amount of money for which a product or service is sold to the customer.
Plantwide Predetermined Rate
A single overhead absorption rate calculated for an entire factory, used to allocate overhead costs to products.
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