The Black Horse Is Currently Considering a Project That Will

question 108

Multiple Choice

The Black Horse is currently considering a project that will produce cash inflows of $12,000 a year for three years followed by $6,500 in year 4.The cost of the project is $38,000.What is the profitability index if the discount rate is 7 percent?

• A)0.96
• B)0.99
• C)1.04
• D)1.09
• E)1.12

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Definitions:

Back-arc Spreading

A process associated with subduction zones where a new ocean basin opens up behind a volcanic arc, often resulting in the formation of new crust.

Gulf of California

A body of water that separates the Baja California Peninsula from mainland Mexico, known for its deep waters and marine biodiversity.

Sea of Japan

A marginal sea between Japan, Russia, and Korea, connected to the Pacific Ocean, notable for its depth and aquatic biodiversity.

Atoll

A ring-shaped coral reef, island, or series of islets surrounding a lagoon, often found in tropical ocean waters.