The following information is provided by Doppler Systems
Project A Project B Project C Project D
Initial investment $426,000 $214,000 $558,000 $516,000
PV of cash inflows $584,000 $382,000 $806,000 $390,000
Payback period (years) 3.6 3.2 4.0 2.0
NPV of project $158,000 $168,000 $248,000 $126,000
Calculate the profitability index for Project A. (Round your answer to two decimal places.)
A) 1.01
B) 1.08
C) 1.37
D) 1.67
C .C) Profitability Index = Present value of net cash inflows / Initial investment = $584,000 / $426,000 = 1.37
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