Anna Taylor Buys a Machine for Her Business

question 84

Multiple Choice

Anna Taylor buys a machine for her business. The machine costs $150,000. Anna estimates that the machine can produce $40,000 cash inflow per year for the next five years. Her cost of capital is 12 percent. What is the approximate profitability index of this investment?

• A) 1.08
• B) 0.96
• C) 1.10
• D) 1.22

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Definitions:

Somatic Nervous System

The part of the peripheral nervous system that controls voluntary movements of the body and transmits sensory information to the central nervous system.

Neurons

Specific cell types in the nervous system responsible for conveying information through chemical and electrical signals.

Pedaling

The act of operating the pedals of a bicycle, exercise bike, or similar machinery, often to propel it forward or to generate power.

Parasympathetic Nervous System

Part of the autonomic nervous system responsible for rest and digest activities, counterbalancing the sympathetic nervous system.