Zellars,Inc

question 85

Multiple Choice

Zellars,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.Zellars,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:

International Monetary Fund

An international organization that aims to promote global economic growth and financial stability, encouraging international trade and reducing poverty.

Federal Reserve Wire Network

A real-time payment and settlement system operated by the United States Federal Reserve, facilitating the movement of funds between financial institutions.

Money Center Banks

Large financial institutions that offer a wide array of services and operate at national or international levels, typically located in major financial centers.

Conventional Banks

Financial institutions that offer a wide range of banking services without following any specific religious or ethical restrictions.