The Following Information Is Provided by Graham Company Which Project Has the Highest Profitability Index?
A) Project a |

question 150

Multiple Choice

The following information is provided by Graham Company: $$\begin{array} { | l | r | r | r | r | } \hline & \text { Project A } & \text { Project B } & \text { Project C } & \text { Project D } \\\hline \text { Initial investment } & \$ 434,000 & \$ 200,000 & \$ 568,000 & \$ 510,000 \\\hline \text { PV of cash inflows } & \$ 572,000 & \$ 396,000 & \$ 808,000 & \$ 402,000 \\\hline \text { Payback period (years) } & 3.6 & 3.2 & 4.0 & 2.0 \\\hline \text { NPV of project } & \$ 138,000 & \$ 196,000 & \$ 240,000 & ( \$ 108,000 ) \\\hline\end{array}$$ Which project has the highest profitability index?

• A) Project A
• B) Project B
• C) Project C
• D) Project D

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Definitions:

Wage Differences

The variation in pay for different jobs or workers, based on factors like skill level, location, or job demand.

Years of Schooling

Refers to the total number of years an individual has spent in formal education settings, from elementary through higher education.

Job Characteristics

Attributes or aspects of a job that influence an employee's work environment and satisfaction, such as task variety, autonomy, and feedback.

Bertrand and Mullainathan

Scholars known for their contributions to the understanding of market mechanisms and behaviors, particularly in the context of labor economics and discrimination.