The following information is available for a potential capital investment.

Initial investment $80,000 Salvage value 10,000 Net annual cash fl ow 14,820 Net present value 18,112 Useful life 10 years The potential investment’s profitability index (rounded to two decimals) is:

(a) 5.40.

(c) 1.23.

(b) 1.19.

(d) 1.40.

AppendixLO1