Use the Table for the Question(s)below

question 2

Multiple Choice

Use the table for the question(s) below.
Consider a project with the following cash flows:

-Assume the appropriate discount rate for this project is 15%. The profitability index for this project is closest to:

• A)0.14
• B)0.22
• C)0.15
• D)0.60

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Definitions:

Total Taxes

The combined amount of all the taxes imposed by a government on an individual or business, including income tax, property tax, sales tax, etc.

Average Tax Rate

The proportion of total income that is paid in taxes, calculated by dividing the total tax paid by the total income.

Total Income

The sum of all earnings obtained by an individual, household, or firm, including wages, salaries, profits, rents, and other forms of revenue.

Tax Base

The total amount of assets or income that can be taxed by a government, forming the foundation of its revenue.