Suppose you are considering a project that will have an initial construction cost today and a final The initial cost is $64,000 today, followed by expected annual inflows of $12,000 for the next 9 ye year after the last inflow. If your cost of capital is 5.8%, what is this project's profitability index? a. 1.17 b. 0.75 O c. 0.55 d. 1.60 e. 1.10 f. 0.63 g. 1.32 O h. 0.96

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
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QUESTION 10
Suppose you are considering a project that will have an initial construction cost today and a final cleanup cost at the end of the project's lifetime.
The initial cost is $64,000 today, followed by expected annual inflows of $12,000 for the next 9 years, followed by a final outflow of $39,000 one
year after the last inflow. If your cost of capital is 5.8%, what is this project's profitability index?
O a. 1.17
O b. 0.75
O c. 0.55
O d. 1.60
e. 1.10
O f. 0.63
O g. 1.32
O h. 0.96
Transcribed Image Text:QUESTION 10 Suppose you are considering a project that will have an initial construction cost today and a final cleanup cost at the end of the project's lifetime. The initial cost is $64,000 today, followed by expected annual inflows of $12,000 for the next 9 years, followed by a final outflow of $39,000 one year after the last inflow. If your cost of capital is 5.8%, what is this project's profitability index? O a. 1.17 O b. 0.75 O c. 0.55 O d. 1.60 e. 1.10 O f. 0.63 O g. 1.32 O h. 0.96
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