COTB MC Qu. 14-58 (Algo) Assume that a company is considering...

Assume that a company is considering a capital investment project with a four-year time horizon and the following cash flows:

Cost of new equipment	$ 200,000
Working capital required	$ 50,000
Annual net cash inflows	$ 100,000
Maintenance and repairs in third year	$ 40,000
Salvage value of equipment in fourth year	$ 30,000

Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using the tables provided. Assuming the companys required rate of return is 13%, the profitability index of the project is closest to:Multiple Choice

• 1.16.

• 1.20.

• 1.27.

• 1.32.