Barnacle Bob's Fish and Tackle Shop Is Planning an Expansion

Multiple Choice

Barnacle Bob's Fish and Tackle Shop is planning an expansion.The initial investment is $480,000 and anticipates cash inflows as listed below.The cost of capital is 12.2%.Based on the profitability index, should Barnacle Bob go ahead with the project?
$$\begin{array} { | c | c | } \hline \text { Years } & \text { Cash Influm } \\\hline 1 & 190,000 \\\hline 2 & 105,000 \\\hline 3 & 105,000 \\\hline 4 & 195,000 \\\hline 5 & 195,000 \\\hline 0 & 195,000 \\\hline\end{array}$$

A) No, the profitability index is 2.
B) No, the profitability index is .95
C) Yes, the profitability index is 1.18
D) Yes, the profitability index is .78