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