A Firm Is Reviewing a Project That Has an Initial

question 37

Multiple Choice

A firm is reviewing a project that has an initial cost of $71,000. The project will produce annual cash inflows, starting with year 1, of $8,000, $13,400, $18,600, $33,100 and finally in year five, $37,900. What is the profitability index if the discount rate is 11 percent?

• A) 0.92
• B) 0.98
• C) 1.02
• D) 1.07
• E) 1.12

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Definitions:

Engaging Activity

An action or task that captures one’s attention and interest, leading to active participation or involvement.

Physically Challenging

Describes activities or tasks that require significant physical effort, endurance, or strength to accomplish.

Intrinsically Rewarding

Referring to an activity or object that is rewarding in itself, not because of any external rewards it may bring.

Fully Involved

A term often used in emergency services to describe a situation where a structure is fully engulfed in flames and fire.