What Is the Profitability Index for a Project Costing $40,000

question 86

Multiple Choice

What is the profitability index for a project costing $40,000 and returning $15,000 annually for 4 years at an opportunity cost of capital of 12%?

• A) 0.139
• B) 0.320
• C) 0.500
• D) 0.861

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Definitions:

Tentative Statement

A proposition or assertion that is not final and might be subject to change.

Variables

Elements, factors, or conditions that can change and affect the outcome of experiments or studies.

Experimental Method

The experimental method is a scientific approach to research in which variables are controlled and manipulated to observe their effect on other variables, allowing for cause-and-effect conclusions.

Laboratory

A controlled setting designed for scientific experiments, research, or testing, equipped with specific tools and equipment.