Cheryl Peck Purchased a Computer Network for Her Classroom

question 2

Multiple Choice

Cheryl Peck purchased a computer network for her classroom.The computer network cost $100,000.She estimates that she can charge $500 for one session in the classroom.Cheryl knows that enrollment will increase over time.She estimates 50 students the first year,75 students the second year,100 students the third year,and 150 students the fourth year.If her cost of capital is 12 percent,what is the approximate profitability index?

• A)1)35
• B)1)05
• C)1)88
• D)1)19

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Definitions:

Repurchase Shares

The act of a company buying back its own shares from the marketplace, reducing the number of outstanding shares.

Break-even Level

The point at which total costs and total revenue are equal, meaning there is no net loss or gain.

Earnings per Share

A company's net profit divided by the number of its outstanding shares, indicating the portion of a company's profit allocated to each share of stock.

Repurchase Shares

A corporate action where a company buys back its own shares from the marketplace, which can reduce the number of outstanding shares and potentially increase the value of remaining shares.