Suppose You Have an Opportunity to Invest in a Project

question 147

Multiple Choice

Suppose you have an opportunity to invest in a project, which is expected to generate $6,800 in year 1, $7,200 in year 2, and $7,500 in year 3.The appropriate risk-adjusted discount rate for the project is 10.5%.The project's initial investment is $15,000.What is the profitability index?

• A)1.29
• B)1.17
• C)0.85
• D)0.17

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