Calculate the Profitability Index of a 20-Year Project with a Cost

question 85

Multiple Choice

Calculate the profitability index of a 20-year project with a cost of $400,000 and annual cash flows of $50,000 in years 1-10 and $25,000 in years 11-20. The company's required rate of return is 10%.

• A) 0.92
• B) 0.98
• C) 1.02
• D) 1.08
• E) 1.15

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Definitions:

James-Lange Theory

A theory suggesting that emotions result from the experience of physiological reactions in the body.

Emotional Preference

An individual's inclination towards certain feelings or emotional states over others, often influencing their choices and behavior.

Two-factor Theory

A psychological theory that proposes emotion is based on two factors: physiological arousal and cognitive label.

Stimuli

External or internal events that elicit a response from the sensory system or the organism as a whole.