Consider the following cash flows for two mutually exclusive capital investment projects. The required rate of return is 15%. Use this information for the questions. Year Project A Cash Project B Cash Flow Flow -$40,000 -$30000 12,000 9,000 12,000 9,000 3 12,000 9,000 4 10,800 8,100 10,800 8,100 5,400 8,100 What is the profitability index of project B? O 1.06 1.117 O 1.09 O .94 O 1.03
Consider the following cash flows for two mutually exclusive capital investment projects. The required rate of return is 15%. Use this information for the questions. Year Project A Cash Project B Cash Flow Flow -$40,000 -$30000 12,000 9,000 12,000 9,000 3 12,000 9,000 4 10,800 8,100 10,800 8,100 5,400 8,100 What is the profitability index of project B? O 1.06 1.117 O 1.09 O .94 O 1.03
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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Transcribed Image Text:Consider the following cash flows for two mutually exclusive capital investment projects. The required rate of
return is 15%. Use this information for the questions.
Year
Project A Cash
Project B Cash
Flow
Flow
-$40,000
-$30000
12,000
9,000
12,000
9,000
3
12,000
9,000
4
10,800
8,100
10,800
8,100
5,400
8,100
What is the profitability index of project B?
O 1.06
1.117
O 1.09
O .94
O 1.03
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