Mead Company is considering the purchase of an investment. The following information pertains to the potential investment:
Initial investment $225,000
Net annual cash flows 23,500
Net present value 42,867
Salvage value 20,000
Useful life 10 years
What is the profitability index of the potential investment?
A) 1.19.
B) 1.10.
C) 1.21.
D) 1.11.
Correct Answer:
Verified
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