Talley Manufacturing Has a Project That Requires an Initial Investment $$\begin{array} { c c } \text { Year } & \text { Annual cash flow } \\\hline 1 & \$40000 \\2 &\$ 30000 \\3 & \$20000\end{array}$$

question 68

Multiple Choice

Talley Manufacturing has a project that requires an initial investment of $60 000 and has the following expected stream of cash flows:
$$\begin{array} { c c } \text { Year } & \text { Annual cash flow } \\\hline 1 & \$40000 \\2 &\$ 30000 \\3 & \$20000\end{array}$$
Assuming the company's cost of capital is 14 per cent,what is the profitability index for the project?

• A) .84
• B) 1.32
• C) 1.50
• D) 1.19

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Definitions:

Pleasure Principle

A psychoanalytic concept where behavior is driven by the desire to seek pleasure and avoid pain, primarily associated with the id aspect of personality.

Repression

A defense mechanism where unwanted thoughts or desires are unconsciously pushed out of conscious awareness.

Defense Mechanism

A defense mechanism is a psychological strategy unconsciously used to protect oneself from anxiety arising from unacceptable thoughts or feelings.

Anxiety-Arousing Thoughts

Internal cognitions or thoughts that trigger or increase feelings of anxiety, fear, or unease.