Dizzyland Enterprises Has Been Presented with an Investment Opportunity That

question 61

Multiple Choice

Dizzyland Enterprises has been presented with an investment opportunity that will yield end-of-year cash flows of $30,000 per year in Years 1 through 4,$35,000 per year in Years 5 through 9,and $40,000 in Year 10.This investment will cost the firm $150,000 today,and the firm's cost of capital is 10%.What is the profitability index for this investment?

• A)1.34
• B)0.87
• C)1.85
• D)0.21

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Definitions:

Achieving Goals

The process of setting targets and taking the necessary steps to accomplish them.

Behavior

The actions or reactions of a person or system in response to external or internal stimuli.

Marketing Channel

Critical actions or procedures required to shift goods' ownership from the production point to the consumption point.

Profitability

The financial success indicated by the surplus of income over expenses, demonstrating a company's ability to generate earnings.