A Firm Is Reviewing a Project That Has an Initial

Multiple Choice

A firm is reviewing a project that has an initial cost of $71,000.The project will produce annual cash inflows,starting with year 1,of $8,000,$13,400,$18,600,$33,100,and finally in year 5,$37,900.What is the profitability index if the discount rate is 11 percent?

A) 0.92
B) 0.98
C) 1.02
D) 1.07
E) 1.12