Use the Table for the Question(s)below

question 20

Multiple Choice

Use the table for the question(s) below.
Consider the following two projects with cash flows in $:
-The profitability index for project A is closest to:

• A)0.12.
• B)21.65.
• C)0.17.
• D)12.04.

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Definitions:

Interest Coverage Ratio

A financial metric that measures a company's ability to pay interest on its outstanding debt.

ROE

Return on Equity; a measure of a corporation's profitability that reveals how much profit a company generates with the money shareholders have invested.

Debt to Equity Ratio

A financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets.

Fixed Costs

Expenses that remain constant for a given period of time, regardless of the level of production or output.