The Relevant Discount Rate for the Following Set of Cash

question 21

Multiple Choice

The relevant discount rate for the following set of cash flows is 14 percent.What is the profitability index?

• A) 0.89
• B) 0.93
• C) 0.99
• D) 1.03
• E) 1.07

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Definitions:

Critical Value

A critical value is a point on the distribution that represents a threshold above which significant results are considered to occur.

Statistical Hypotheses

Statements made for statistical testing, including a null hypothesis and possibly an alternative hypothesis, concerning the parameters or distribution of a population.

Research Hypotheses

Proposals made by researchers that predict a potential outcome, relationship, or effect that will be tested through study or experimentation.

Data Analysis

The process of inspecting, cleansing, transforming, and modeling data to discover useful information and support decision-making.