What Is the Profitability Index of an Investment with Cash

question 4

Multiple Choice

What is the profitability index of an investment with cash flows in years 0 thru 4 of -340, 120, 130, 153, and 166, respectively, and a discount rate of 16 percent?

• A).15
• B).22
• C).35
• D).42

Assess special order decisions, including profitability and impact on normal operations.

Evaluate make or buy decisions based on cost analysis and other relevant factors.

Analyze additional business considerations based on variable and fixed costs.

Understand relevant and irrelevant costs for decision making.

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Definitions:

Fund Utilization

The process of using allocated funds or resources efficiently for intended purposes.