The Following Details Are Provided by Dopler Company Calculate the Profitability Index for Project A

question 119

Multiple Choice

The following details are provided by Dopler Company: $$\begin{array} { | l | r | r | r | r | } \hline & \text { Project A } & \text { Project B } & \text { Project C } & \text { Project D } \\\hline \text { Initial investment } & \$ 420,000 & \$ 200,000 & \$ 550,000 & \$ 500,000 \\\hline \text { PV of cash inflows } & \$ 570,000 & \$ 380,000 & \$ 800,000 & \$ 390,000 \\\hline \text { Payback period (years) } & 3.6 & 3.2 & 4.0 & 2.0 \\\hline \text { NPV of project } & \$ 150,000 & \$ 180,000 & \$ 250,000 & ( \$ 110,000 ) \\\hline\end{array}$$ Calculate the profitability index for Project A.

• A) 0.98
• B) 1.08
• C) 1.36
• D) 1.66

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Definitions:

Two Variables

Refers to situations or analyses that involve two different variables, allowing for the examination of relationships or interactions between them.

Time Series Trend Equation

A mathematical formula that models the underlying trend of a time series data set, often used in forecasting future values based on past data.

Forecast Including Trend

A predictive analysis that accounts for historical data and identifies future patterns, trends, and likely outcomes.