Peter Is Considering a Project with an Initial Cost of $42,000

question 59

Multiple Choice

Peter is considering a project with an initial cost of $42,000 and annual cash inflows of $9,100 a year for six years. What discount rate, when applied to this project, will produce a profitability index of 1.0?

• A) 7.00%
• B) 7.65%
• C) 7.88%
• D) 8.05%
• E) 8.11%

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Definitions:

Hydrogen Gas

A colorless, odorless, and highly flammable gas, the lightest and most abundant element in the universe, used in various industrial processes.

Biomass

Organic material derived from plants and animals, which can be used as a renewable energy source.

Environmental Quality

Refers to the condition of the environment and its capacity to support the health of ecological communities and human well-being.

Hydroelectricity

Electricity generated by harnessing the energy of falling or flowing water, typically by using dams or diversion structures to drive water turbines and generators.