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(Ignore Income Taxes in This Problem

Question 113

Multiple Choice

(Ignore income taxes in this problem.) The management of Cerra Corporation is considering three investment projects I, J, and K. Project I would require an investment of $18,000, Project J of $42,000, and Project K of $85,000. The present value of the cash inflows would be $19,260 for Project I, $45,780 for Project J, and $91,800 for Project K.
-The profitability index of investment project J is closest to:


A) 0.08
B) 0.91
C) 0.09
D) 1.09

Correct Answer:

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