A 50- Year Project Has a Cost of $500,000 and Has

question 56

Multiple Choice

A 50- year project has a cost of $500,000 and has annual cash flows of $100,000 in years 1-25, and $200,000 in years 26-50. The company's required rate is 8%. Given this information, calculate the profitability index of the project.

• A) 1.76
• B) 2.06
• C) 2.16
• D) 2.46
• E) 2.76

---

Definitions:

Buying Center

A group of individuals within an organization who are involved in the process of evaluating and making purchasing decisions.

Evaluating Options

The process of analyzing and comparing different choices in order to make a decision or solve a problem.

Individual Differences

Variations among individuals in their behavior, cognition, personality, and other attributes, which distinguish one person from another.

Consumer Behavior

The study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society.