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:

Coccolithophorids

A group of planktonic algae that produce calcium carbonate plates known as coccoliths, contributing significantly to marine sediments.

Brown Algae

A large group of mostly marine multicellular algae, including many seaweeds, that are typically brown due to the presence of fucoxanthin pigment.

Representative Clade

A taxonomic group representing a branch on the tree of life, including an ancestor and all its descendants.

Supergroup

A high-level taxonomic rank in the classification of organisms that is above the level of kingdom, used to organize the diversity of life.