A Project Has an Initial Investment of $100,000 and a Profitability

question 364

Multiple Choice

A project has an initial investment of $100,000 and a profitability index of 0.15. The discount rate is 12%. The present value of cash inflows for the project is closest to:

• A) $15,000
• B) $115,000
• C) $112,000
• D) $12,000

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Definitions:

Drawee

The party in a financial transaction who is directed to pay a certain amount of money by the drawer's order.

Payee

The person or entity to whom money is payable, especially in the context of a check, draft, or promissory note.

Specific Time

Denotes a precise moment or period that is identified for the occurrence of an event or action.

Non-Recourse

Pertaining to a loan or obligation where the lender's recovery, in the event of default, is limited to the collateral securing the loan, with no further claim on the borrower’s assets.