(Ignore income taxes in this problem.) Your Corporation is considering the following three investment projects:MInitial investment$46,000$75,000$95,000Present value of cash flows$49,850$80,250$102,500What it the profitability index for investment project O?O.079O .927.065.073

Profitability Index = Present Value of cash flows / Initial investment =$102,500 / $95,000 =1.079

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What it the profitability index for investment project O?

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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Question

(Ignore income taxes in this problem.) Your Corporation is considering the following three investment projects:
M
Initial investment
$46,000
$75,000
$95,000
Present value of cash flows
$49,850
$80,250
$102,500
What it the profitability index for investment project O?
O.079
O .927
.065
.073

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