A Company Is Considering Four Mutually Exclusive Projects A, B

question 25

Multiple Choice

A company is considering four mutually exclusive projects A, B, C, and D.Project A requires an initial investment of $100,000 and is expected to generate after-tax cash flows of $62,500 per year for two years.Project B requires an initial investment of $160,000 and is expected to generate after-tax cash flows of $72,000 per year for three years.Project C requires an initial investment of $125,000 and is expected to generate $45,000 per year for four years.Project D requires an initial investment of $200,000 and is expected to generate after-tax cash flows of $87,500 per year for three years.The appropriate discount rate is 10%.Rank the projects by their Profitability Index (PI) in descending order (i.e.from highest PI to lowest) .

• A)A, B, C, D
• B)B, C, A, D
• C)C, B, D, A
• D)D, A, B, C

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Definitions:

Unionism

The principle or policy of forming, joining, and promoting the interests of labor unions to protect and improve the rights and working conditions of workers.

Cooperative Document

A written agreement used in collaborative arrangements to outline the responsibilities and expectations of all parties involved.

Labor-Management Relationship

The dynamics between employees (and their representatives) and employers, focusing on negotiation, cooperation, and conflict resolution.

Union Commitment

The dedication and loyalty members demonstrate towards their union, often reflecting in active participation and support for union activities and goals.