The Net Present Value of an Investment Project Is $28,842

question 126

Multiple Choice

The net present value of an investment project is $28,842 and its project profitability index is 0.1518. The initial investment in this project was:

• A)$190,000
• B)$25,041
• C)$215,800
• D)$185,200

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Definitions:

Accounts Receivable Turnover

A financial ratio that measures how efficiently a company collects cash from credit sales by comparing net credit sales with the average accounts receivable balance.

Net Credit Sales

The total amount of sales made on credit, subtracting returns and allowances.

Accounts Receivable

Money owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.

Times Interest Earned Ratio

The times interest earned ratio is a financial metric that measures a company's ability to meet its debt obligations based on its current earnings before interest and taxes (EBIT).