ABC Manufacturing Has a Project That Requires an Initial Investment $$\begin{array} { c c } \text { Year } & \text { Annual cash flow } \\\hline 1 & \$ 80000 \\2 & \$ 60000 \\3 & \$ 20000\end{array}$$

question 77

Multiple Choice

ABC Manufacturing has a project that requires an initial investment of $100 000 and has the following expected stream of cash flows:
$$\begin{array} { c c } \text { Year } & \text { Annual cash flow } \\\hline 1 & \$ 80000 \\2 & \$ 60000 \\3 & \$ 20000\end{array}$$
Assuming the company's cost of capital is 12 per cent,what is the profitability index for the project?

• A) .749
• B) 1.335
• C) 1.600
• D) 2.985

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Definitions:

Secondary Reinforcers

Stimuli that acquire their reinforcing properties through their association with primary reinforcers, which are inherently rewarding.

Operant Conditioning

A learning process in which the consequences of an action determine the likelihood of it being repeated.

Shaping

A method in operant conditioning by which behaviors are gradually trained or shaped by rewarding approximations of the desired behavior.

Sea Lions

Marine mammals belonging to the family Otariidae, characterized by external ear flaps, long foreflippers, and the ability to walk on all fours on land.