Use the Table for the Question(s) Below -Assume the Appropriate Discount Rate for This Project Is 15

question 29

Multiple Choice

Use the table for the question(s) below.
Consider a project with the following cash flows:
$\begin{array} { l c } \hline \text { Year } & \text { Cash Flow } \\\hline 0 & - 10,000 \\\hline 1 & 4000 \\\hline 2 & 4000 \\\hline 3 & 4000 \\\hline 4 & 4000 \\\hline\end{array}$
-Assume the appropriate discount rate for this project is 15%. The profitability index for this project is closest to:

• A) 0.15
• B) 0.22
• C) 0.60
• D) 0.14

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Definitions:

Internal Reports

Financial or operational reports intended for use within an organization, not for external stakeholders.

Decision-Making Process

A series of steps followed by an individual or an organization to identify and evaluate options to make a choice.

Variable Costs

Expenses that vary directly with the level of production or sales volume, such as raw materials and direct labor.

Revenues

The gross increase in owner’s equity resulting from business activities entered into for the purpose of earning income.