Consider a project with the following cash flows: Year Cash Flow - 8000 1 3200 2 3200 3 3200 4 3200 Assume the appropriate discount rate for this project is 14%. The profitability index for this project is closest to: O A. 0.66 O B. 0.18 O C. 0.25 D. 0.17

Consider a project with the following cash flows: Year Cash Flow - 8000 1 3200 2 3200 3 3200 4 3200 Assume the appropriate discount rate for this project is 14%. The profitability index for this project is closest to: O A. 0.66 O B. 0.18 O C. 0.25 D. 0.17

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

Consider a project with the following cash flows:
Year
Cash Flow
- 8000
1
3200
2
3200
3
3200
4
3200
Assume the appropriate discount rate for this project is 14%. The profitability index for this project is closest to:
O A. 0.66
O B. 0.18
O C. 0.25
O D. 0.17

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