A New Product Has Start-Up Costs of $389,200 and Projected

Multiple Choice

A new product has start-up costs of $389,200 and projected cash flows of $102,000,$187,500,and $245,000 for Years 1 to 3,respectively.What is the profitability index given a required return of 14 percent?

A) 0.98
B) 0.83
C) 1.16
D) 1.03
E) 1.21