The Following Information Is Provided by Doppler Systems Calculate the Profitability Index for Project A

question 79

Multiple Choice

The following information is provided by Doppler Systems: $$\begin{array} { | l | r | r | r | r | } \hline & \text { Project A } & \text { Project B } & \text { Project C } & \text { Project D } \\\hline \text { Initial investment } & \$ 440,000 & \$ 202,000 & \$ 550,000 & \$ 506,000 \\\hline \text { PV of cash inflows } & \$ 570,000 & \$ 394,000 & \$ 816,000 & \$ 406,000 \\\hline \text { Payback period (years) } & 3.6 & 3.2 & 4.0 & 2.0 \\\hline \text { NPV of project } & \$ 130,000 & \$ 192,000 & \$ 266,000 & \$ 100,000 \\\hline\end{array}$$ Calculate the profitability index for Project A.(Round your answer to two decimal places.)

• A) 0.85
• B) 1.09
• C) 1.30
• D) 1.67

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