Question & Answer: vestment of $15,000, Project C of $50,000, and Project D of $89,000.The present value of the cash in proje…..

Expert Answer

MC Qu. 134 (ignore income taxes in this problem.) The management... Pre ·C, and D Project B would require an ives ment o, sis o Ignore income taxes in this problem) The management of Keno Corporation is considering three Investment C of $50,000, and Project D of $89,000 The present value of the cash in project fows would be $16350 for Project·$56,500 for Project C, and S96020 for Project D. The profitability index of investment project C is closest to: O 013 O 113 O 012 O 087

The management of Keno Corporation is considering three investment projects-B, C, and D. Project B would require an investment of $15,000, Project C of $50,000, and Project D of $89,000.The present value of the cash in project inflows would be $16,350 for Project B,middot$56,500 for Project C, and $96,120 for Project D. The profitability index of investment project C is closest to: 0.13 1.13 0.12 0.87

Answer: PI of Project C = 1.13

Calculation:

Profitability index is given by the formula = PV of cash inflows/Initial investment (PV of cash outflows)

PI for Project C = 56500/50000 =

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