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

question 23

Multiple Choice

The following details are provided by Dopler Company:
$\begin{array}{|c|c|c|c|c|}\hline & \text { Project A } & \text { Project B } & \text { Project C } & \text { Project D } \\\hline \text { Initial investment } & \$ 440,000 & \$ 208,000 & \$ 552,000 & \$ 512,000 \\\hline \text { PV of cash inflows } & \$ 588,000 & \$ 384,000 & \$ 818,000 & \$ 408,000 \\\hline \text { Payback period (years) } & 3,6 & 3.2 & 4.0 & 2.0 \\\hline \text { NPV of project } & \$ 148,000 & \$ 176,000 & \$ 266,000 & 104,000 \\\hline\end{array}$

Calculate the profitability index for Project A.

• A) 1.34
• B) 0.94
• C) 1.67
• D) 1.08

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