Adam's Manufacturing Has the Following Information Available Regarding One of the Projects

question 71

Multiple Choice

Adam's Manufacturing has the following information available regarding one of the projects it is considering:
$\begin{array}{lr} \text { Initial investment} &\$500000\\ \text { Net present value } &\$80000\\\end{array}$

The profitability index of this project is:

• A) 6.25
• B) .16
• C) 1.16
• D) .86

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Definitions:

Interest-Rate Cost of Borrowing

The cost associated with borrowing funds, typically expressed as a percentage of the amount borrowed.

R&D Expenditure

Funds allocated by a business or government towards research and development projects to innovate or improve products or services.

Added Profit

The additional profit generated from an activity or investment beyond the usual or expected return.

Expected-Rate-of-Return-Curve

A graphical representation that shows the relationship between the expected return on investment and the level of investment risk.