What Is the Profitability Index of the Following Investment If

question 53

Multiple Choice

What is the profitability index of the following investment if the required return = 14%?

• A) 0.92
• B) 1.11
• C) 1.13
• D) 1.27
• E) 1.93

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Definitions:

Computer Industry

Refers to the business sector involved in the development, manufacturing, and sale of computers, computer components, and software.

Substitute Capital

Assets or investments that can be used as alternatives to others, capable of fulfilling similar functions or bringing similar returns in a portfolio.

Price of Capital

The cost of using capital goods in production, which can include interest payments on loans or rent on equipment.

Marginal Product

The additional output gained by adding one more unit of a specific input, keeping all other inputs constant.