A Firm Is Reviewing a Project That Has an Initial

question 35

Multiple Choice

A firm is reviewing a project that has an initial cost of $67,000.The project will produce annual cash inflows, starting with Year 1, of $8,000, $13,400, $18,600, $24,100, and finally in Year 5, $37,900.What is the profitability index if the discount rate is 11 percent?

• A).92
• B).98
• C)1.02
• D)1.05
• E)1.09

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Definitions:

Working Memory

A brain function of limited capability designed to hold information in the short term for later processing.

Chunks

In cognitive psychology, chunks refer to the units of information organized and grouped together for easier understanding and recall.

Long-Term Memory

The aspect of memory in which information is stored for an extended period, potentially as long as a lifetime.

Mnemonic Device

A strategy or technique that aids in remembering information, such as an acronym or rhyme.