The Management of Hibert Corporation Is Considering Three Investment Projects-W

Multiple Choice

The management of Hibert Corporation is considering three investment projects-W, X, and Y. Project W would require an investment of $21,000, Project X of $66,000, and Project Y of $95,000. The present value of the cash inflows would be $22,470 for Project W, $73,920 for Project X, and $98,800 for Project Y. (Ignore income taxes.) The profitability index of investment project X is closest to:

A) 0.11
B) 0.88
C) 1.12
D) 0.12