Using the Profitability Index Method, the Present Value of Cash

question 80

Multiple Choice

Using the profitability index method, the present value of cash inflows for Project Flower is $88,000 and the present value of cash inflows of Project Plant is $48,000. If Project Flower and Project Plant require initial investments of $90,000 and $40,000, respectively, and have the same useful life, the project that should be accepted is

• A) Project Flower.
• B) Project Plant.
• C) Either project may be accepted.
• D) Neither project should be accepted.

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Definitions:

Proportion

The relationship or ratio between quantities or sizes, illustrating how one quantity is related to another.

Undergraduate Nursing Degree

A program of study that leads to a bachelor's degree in nursing, preparing students for a career as a registered nurse.

Established

Recognized and accepted, typically referring to something that has been in existence for a long time.

Modernization

The process of adopting the latest technology, ideas, and practices to improve efficiency, productivity, and quality of life.