The Owner of a Number of Gas Stations Is Considering

question 80

Multiple Choice

The owner of a number of gas stations is considering installing coffee machines in his gas stations.It will cost $280,000 to install the coffee machines,and they are expected to boost cash flows by $120,000 per year for their five-year working life.What must the cost of capital be if this investment has a profitability index of 1?

• A)1.06%
• B)2.34%
• C)4.69%
• D)5.28%
• E)3.67%