Villena Corporation is considering a project that would require an investment of
ID: 2588680 • Letter: V
Question
Villena Corporation is considering a project that would require an investment of $56,000. No other cash outflows would be involved. The present value of the cash inflows would be $66,640. The profitability index of the project is closest to: (Ignore income taxes in this problem.)
0.16
0.19
0.81
1.19
Villena Corporation is considering a project that would require an investment of $56,000. No other cash outflows would be involved. The present value of the cash inflows would be $66,640. The profitability index of the project is closest to: (Ignore income taxes in this problem.)
Explanation / Answer
profitability index =present value of the cash inflows/initial investment
which is equal to
=(66640/56000)
which is equal to
=1.19(D).
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