Lithium,Inc

question 19

Multiple Choice

Lithium,Inc.is considering two mutually exclusive projects,A and B.Project A costs $95,000 and is expected to generate $65,000 in year one and $75,000 in year two.Project B costs $120,000 and is expected to generate $64,000 in year one,$67,000 in year two,$56,000 in year three,and $45,000 in year four.Lithium,Inc.'s required rate of return for these projects is 10%.The profitability index for Project B is

• A) 1.55.
• B) 1.48.
• C) 1.39.
• D) 1.33.

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Definitions:

Boundary-spanning Network

A social network that extends beyond the internal boundaries of an organization to include external contacts and resources.

Groupthink

A psychological phenomenon that occurs within a group of people, where the desire for harmony and conformity results in irrational or dysfunctional decision-making outcomes.

Relationship Strength

The degree of closeness, connectedness, and positive regard within a relationship.

Reciprocity

The exchange of resources, services, or obligations between individuals or groups, often with the expectation of mutual benefit.