Capital Rationing

question 11

Multiple Choice

Capital rationing. You are considering a project that has an initial cost of $1,200,000. If you take the project, it will produce net cash flows of $300,000 per year for the next six years. If the appropriate discount rate for the project is 10 per cent, what is the profitability index of the project?

• A) 0.09
• B) 1.09
• C) 2.09
• D) 2.18

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Definitions:

Possible Selves

Concepts individuals hold about who they might become, who they hope to become, or who they fear becoming in the future.

Self-efficacy

Someone's conviction in their competence to perform tasks needed for certain achievements.

Reciprocal Determinism

A concept in psychology that posits an individual's behavior is both influenced by and influences their personal factors and the environment.

Spotlight Effect

The belief that others pay more attention to our appearance and behavior than they actually do.