A Project Has an Initial Cost of $100,000 and Generates

question 128

Multiple Choice

A project has an initial cost of $100,000 and generates a present value of net cash inflows of $120,000.What is the project's profitability index?

• A).20
• B)1.20
• C).80
• D)5.00

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Definitions:

Expected Return

is the average return anticipated on an investment, factoring in the probability of each possible outcome.

Beta Coefficient

A measure of a stock's volatility in relation to the overall market, indicating the stock's risk compared to the market average.

Systematic Risk

The risk inherent to the entire market or market segment, indicating how fluctuations in the market can affect individual investments.

Risky Asset

An asset that carries a significant degree of risk of losing all or part of its value.