The Black Horse Is Currently Considering a Project That Will

Multiple Choice

The Black Horse is currently considering a project that will produce cash inflows of $12,000 a year for three years followed by $6,500 in year 4.The cost of the project is $38,000.What is the profitability index if the discount rate is 7 percent?

A) 0.96
B) 0.99
C) 1.04
D) 1.09
E) 1.12