Talley Manufacturing Has a Project That Requires an Initial Investment $$\begin{array} { c c } \text { Year } & \text { Annual cash flow } \\\hline 1 & \$40000 \\2 &\$ 30000 \\3 & \$20000\end{array}$$

Talley Manufacturing has a project that requires an initial investment of $60 000 and has the following expected stream of cash flows:
$$\begin{array} { c c } \text { Year } & \text { Annual cash flow } \\\hline 1 & \$40000 \\2 &\$ 30000 \\3 & \$20000\end{array}$$
Assuming the company's cost of capital is 14 per cent,what is the profitability index for the project?

A) .84
B) 1.32
C) 1.50
D) 1.19

Correct Answer:

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Access For Free