A Firm Is Reviewing a Project That Has an Initial

Multiple Choice

A firm is reviewing a project that has an initial cost of $67,000.The project will produce annual cash inflows, starting with Year 1, of $8,000, $13,400, $18,600, $24,100, and finally in Year 5, $37,900.What is the profitability index if the discount rate is 11 percent?

A) .92
B) .98
C) 1.02
D) 1.05
E) 1.09