InnerC,Inc

question 26

Multiple Choice

InnerC,Inc.is currently considering an five-year project that has an initial outlay or cost of $60,000.The future cash inflows from its project for years 1 through 5 are the same at $20,000.InnerC has a discount rate of 15%.Because of concerns about funds being short to finance all good projects,InnerC wants to compute the profitability index (PI) for each project.What is the PI for InnerC's current project?

• A)About 0.82
• B)About 0.92
• C)About 1.02
• D)About 1.12

Comprehend the idea of opportunity cost in various trade-offs and its calculation in different scenarios.

Grasp the concept of autarky, its definitions, and implications for a country's economy.

Identify and differentiate between goods and services traded internationally.

Apply the concept of comparative and absolute advantages in international trade and their roles in determining trade patterns.

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Definitions:

Interest Rates

The cost of borrowing money or the compensation for the service and risk of lending money, typically expressed as a percentage.

Random Walk Theory

A theory in finance suggesting that stock market prices evolve according to a random walk and thus cannot be predicted.

Inefficient Market Theory

The theory that asserts markets are not always perfectly efficient, meaning not all available information is always fully reflected in asset prices.

Technical Analysis

A trading approach that evaluates investments and identifies trading opportunities by analyzing statistical trends gathered from trading activity, such as price movement and volume.