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We-Know-Widgets,Inc

Question 20

Multiple Choice

We-Know-Widgets,Inc.is analyzing a project that requires an initial investment of $10,000,followed by cash inflows of $1,000 in Year 1,$4,000 in Year 2,and $15,000 in Year 3.The cost of capital is 10%.What is the profitability index of the project?


A) 1.04
B) 1.55
C) 1.78
D) 1.97

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