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Questions 6-7 are based on the following information. The Doobie Brothers Company is currently considering a project that will produce cash inflows of $15,000 a
Questions 6-7 are based on the following information. The Doobie Brothers Company is currently considering a project that will produce cash inflows of $15,000 a year for four years followed by $5,500 in Year 5. The cost of the project is $43,000.
6. What is the profitability index if the discount rate is 8 percent?
a. .85
b. .96
c. 1.24
d. 1.14
7. What is your decision for this project based on the above information?
a. Accept
b. Reject
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