Given the Following Information and Assuming a CCA Rate of 20

question 182

Multiple Choice

Given the following information and assuming a CCA rate of 20%, what is the profitability index of this project? Initial investment = $400,000; life = five years; before-tax cost savings = $150,000 per year; salvage value = $30,000 in year 5; tax rate = 34%; discount rate = 14%.

• A) 0.45
• B) 0.74
• C) 1.07
• D) 1.65
• E) 1.98

---

Definitions:

Milliliters

A unit of volume in the metric system, equal to one thousandth of a liter.

Fluid

Fluid is a substance that can flow and take the shape of its container, encompassing liquids, gases, and plasmas.

Metric Tons

A unit of mass equal to 1,000 kilograms, or approximately 2,204.6 pounds, used worldwide in industrial and commercial applications.

Pounds

Pounds is a unit of weight commonly used in the United States and the British Commonwealth, equivalent to 0.453592 kilograms.