Consider a Project with the Following Cash Flows: After-Tax After-Tax

question 57

Multiple Choice

Consider a project with the following cash flows: After-Tax After-Tax
Accounting Cash Flow
Year Profits from Operations
1 $799 $750
2 $150 $1,000
3 $200 $1,200
Initial outlay = $1,500
Terminal cash flow = 0
Compute the profitability index if the company's discount rate is 10%.

• A) 15.8
• B) 1.61
• C) 1.81
• D) 0.62

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