Suppose a Project Requires an After-Tax Incremental Cash Outflow of $40,000

question 71

Multiple Choice

Suppose a project requires an after-tax incremental cash outflow of $40,000 today.The project is expected to generate after-tax cash inflows of $9,000 per year for the next six years.What is the project's Profitability Index (PI) if the appropriate discount rate is10%?

• A)0.92
• B)0.98
• C)1.03
• D)1.11

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Definitions:

Lead

A heavy metal that is toxic to health, often found in paint, pipes, and various industrial products, exposure to which can cause serious health problems.

Secondary Appraisal

The evaluation of one's ability to cope with the consequences of an encountered stressful event, following an initial assessment of the event's significance.

Stress

A physical, mental, or emotional strain or tension resulting from adverse or demanding circumstances.

Susan Folkman

A psychologist known for her research on stress, coping, and appraisal.