Phoxco Would Like to Automate Its Calligraphy Operation

question 10

Multiple Choice

Phoxco would like to automate its calligraphy operation. The equipment will cost $150,000 plus freight, installation, and testing costs of $5,500. The expected life of the project is 8 years, with annual cost savings of $20,000. The minimum rate of return is 12% and estimated terminal value is $3,000. Ignore income taxes. The profitability index of the project is:

• A) 1.55
• B) 1.57
• C) 0.67
• D) 0.65

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Definitions:

Cancer Deaths

Mortality resulting from cancer, indicating the number of individuals who have died as a result of cancer and its complications.

United States

A country in North America made up of 50 states and a federal district, known for its significant cultural and economic influence globally.

Malignant Growth

The formation of cancerous tumors capable of invading and destroying surrounding tissues.

Nonmalignant Growth

A tumor or mass that does not contain cancer cells and does not invade neighboring tissues or spread to other parts of the body.