A 25- Year Project Has a Cost of $1,500,000 and Has

question 71

Multiple Choice

A 25- year project has a cost of $1,500,000 and has annual cash flows of $400,000 in years 1-15, and $200,000 in years 16-25. The company's required rate is 14%. Given this information, calculate the profitability index of the project.

• A) 1.74
• B) 1.50
• C) 1.25
• D) 1.00
• E) 0.75