The Profitability Index for a Project Costing $40,000 and Returning

question 22

Multiple Choice

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% is:

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

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Definitions:

Natural Gestures

Movements or signals made with the body that are instinctive or spontaneously generated, often used in communication.

Pace Back

A movement or action where one walks back and forth in a confined area, often indicating thought or anxiety.

Nonsecured Debt

A type of debt that is not backed by collateral, meaning the lender does not have a claim on any specific asset of the borrower if the debt is unpaid.

Bankruptcy Action

A legal proceeding involving a person or business that is unable to repay outstanding debts.