An investment project requires a net investment of $100,000 and is expected to generate annual net cash inflows of $25,000 for 6 years.The firm's cost of capital is 12 percent.Determine the profitability index for this project.
A)1.50
B)1.028
C).028
D).972

Question

Quizplus · Accepted Answer

PI = [$25,000(PVIFA₀.₁₂,₆)]/$100,000 = [$25,000(4.111)]/$100,000 = 1.028

An Investment Project Requires a Net Investment of $100,000 and Is