Dakota,Inc

question 92

Multiple Choice

Dakota,Inc.is currently considering an eight-year project that has an initial outlay or cost of $140,000.The cash inflows from its project for years 1 through 8 are the same at $35,000.Dakota has a discount rate of 12%.Because there is a shortage of funds to finance all good projects,Dakota wants to compute the profitability index (PI) for each project.That way Dakota can get an idea as to which project might be a better choice.What is the PI for Dakota's current project?

• A)About 1.24
• B)About 1.21
• C)About 1.19
• D)About 1.09

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Definitions:

Procedural Considerations

Aspects that need to be taken into account regarding the methods and processes in decision making or the implementation of policies.

Behavioral Considerations

The impact of human behavior and psychology on decision-making processes within an organization or in economic models.

Substantive Considerations

Factors or issues that are central and essential to the matter at hand, requiring careful analysis and decision-making.

Servicing Model

A union representation model where the focus is on providing services to members, such as legal advice and representation, rather than on mobilizing workers or political action.