A Project Has Expected Cash Inflows, Starting with Year 1

question 111

Multiple Choice

A project has expected cash inflows, starting with Year 1, of $900, $1,200, $1,500, and finally in Year 4, $2,000.The profitability index is 1.11 and the discount rate is 12 percent.What is the initial cost of the project?

• A)$3,899.16
• B)$4,098.24
• C)$3,692.71
• D)$3,211.06
• E)$4,250.00

---

Definitions:

Factory Overhead Account

An account that accumulates all indirect costs associated with the manufacturing process, excluding direct materials and direct labor.

Period Balance

The amount of money remaining at the end of a financial or accounting period, after all transactions have been accounted for.

Cost of Goods Sold

Costs directly connected to creating a company's sold products, encompassing materials and manpower.

Finished Goods Inventory

The assortment of goods that are marketed and ready but have not found buyers.