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The Following Information Is Provided by Dinovo Systems Calculate the Profitability Index for Project B

question 33

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The following information is provided by Dinovo Systems:
 Project A  Project B  ProjectC  Project D  Initial investment $438,000$218,000$560,000$516,000 PV of cash inflows $582,000$388,000$800,000$394,000 Payback period (years) 3.63.24.02.0 NPV of project $144,000$170,000$240,000$122,000\begin{array} { l r r r r } & \text { Project A } & \text { Project B } & \text { ProjectC } & \text { Project D } \\\text { Initial investment } & \$ 438,000 & \$ 218,000 & \$ 560,000 & \$ 516,000 \\\text { PV of cash inflows } & \$ 582,000 & \$ 388,000 & \$ 800,000 & \$ 394,000 \\\text { Payback period (years) } & 3.6 & 3.2 & 4.0 & 2.0 \\\text { NPV of project }& \$ 144,000 & \$ 170,000 & \$ 240,000 & \$ 122,000\end{array} Calculate the profitability index for Project B.Show your calculations and round to two decimal places.

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Definitions:

Common Stock Dividends Distributable

A liability account representing dividends declared by a company but not yet distributed to common stockholders.

Stock Split

A corporate action to increase the number of outstanding shares by dividing each share, which typically makes the stock more affordable.

Common Stock

A form of corporate equity ownership, representing a claim on a portion of the corporation's assets and earnings.

Stock Dividend

A dividend payment made in the form of additional shares of the company's stock rather than cash.

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