Gordon Corporation Is Considering a 30 Year Project

question 27

Multiple Choice

Gordon Corporation is considering a 30 year project.The present value of all future cash flows from the project is $825,000.Its initial investment is $475,000.Calculate the Profitability Index on this project.

• A)0.74
• B)0.84
• C)1.14
• D)1.74

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Definitions:

Reduce Uncertainty

The process of implementing strategies or actions to decrease the level of uncertainty or unpredictability associated with decision-making or future outcomes.

Lease Contract

A legal agreement between two parties where one party (lessor) allows another (lessee) to use an asset for a specific period in exchange for payment.

Future Market Value

The anticipated value of an asset at a future date, based on projections or market trends.