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Kerr Kompany is considering investing in a project that costs $50,000 and is expected to generate cash inflows of $20,450 at the end of each year for three years. The company requires a 11% rate of return on all new investments.                            Present Value of an Annuity of 1     Periods           9%           10%          11%          12%       3             2.531         2.489         2.444         2.402       4             3.239         3.170         3.102         3.037 The profitability index for this project is: A. 1.00. B. 0.80. C. 1.24. D. 1.27.

Kerr Kompany is considering investing in a project that costs $50,000 and is expected to generate cash inflows of $20,450 at the end of each year for three years. The company requires a 11% rate of return on all new investments.                            Present Value of an Annuity of 1     Periods           9%           10%          11%          12%       3             2.531         2.489         2.444         2.402       4             3.239         3.170         3.102         3.037 The profitability index for this project is: A. 1.00. B. 0.80. C. 1.24. D. 1.27.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Kerr Kompany is considering investing in a project that costs $50,000 and is expected to generate cash inflows of $20,450 at the end of each year for three years.

The company requires a 11% rate of return on all new investments.

                           Present Value of an Annuity of 1    

Periods           9%           10%          11%          12%

      3             2.531         2.489         2.444         2.402

      4             3.239         3.170         3.102         3.037

The profitability index for this project is:

A. 1.00.
B. 0.80.
C. 1.24.
D. 1.27.
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