A 25- Year Project Has a Cost of $1,500,000 and Has

question 336

Multiple Choice

A 25- year project has a cost of $1,500,000 and has annual cash flows of $400,000 in years 1-15, and $200,000 in years 16-25. The company's required rate is 14%. Given this information, calculate
The profitability index of the project.

• A) 1.74
• B) 1.50
• C) 1.25
• D) 1.00
• E) 0.75

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Definitions:

Scenario 1-5

Hypothetical situations used for planning and analysis that represent a range, from optimistic to pessimistic forecasts.

Movies

Visual entertainment media that often tell a story or convey messages through a sequence of moving images.

Incremental Adjustment

A process of making small modifications or changes in order to improve or correct a system, often used to fine-tune economic policies or strategies.

Existing Plan

A currently implemented strategy or program, especially in an organizational or governmental context.