Calculate the Profitability Index of a 20-Year Project with a Cost

question 194

Multiple Choice

Calculate the profitability index of a 20-year project with a cost of $400,000 and annual cash flows of $50,000 in years 1-10 and $25,000 in years 11-20. The company's required rate of return is 10%.

• A) 0.92
• B) 0.98
• C) 1.02
• D) 1.08
• E) 1.15

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