A Project Has an Initial Investment of $150,000

question 378

Multiple Choice

A project has an initial investment of $150,000. Its four year cash inflows are estimated to be $50,000 in year 1, $80,000 in years 2 and 3, and $50,000 in year 4. If the rate of return is 12%,
Calculate the project's Profitability Index.

• A) 1.31
• B) 1.41
• C) 1.51
• D) 1.61
• E) 1.71

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Definitions:

Flood Plain

A flat area of land near a river or stream that is subject to flooding during periods of high discharge.

Probability

The quantification of the probability that an event will take place.

Six-Sided Die

A cube-shaped object with each of its six faces marked with a different number of dots from one to six, typically used in games of chance.

Exposure To Risk

Exposure to risk refers to the potential for loss or adverse outcomes faced by individuals or entities, stemming from various sources such as financial transactions, natural disasters, or security threats.