A New Product Has Start-Up Costs of $389,200 and Projected

question 64

Multiple Choice

A new product has start-up costs of $389,200 and projected cash flows of $102,000,$187,500,and $245,000 for Years 1 to 3,respectively.What is the profitability index given a required return of 14 percent?

• A)0.98
• B)0.83
• C)1.16
• D)1.03
• E)1.21

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