Problem:
The black horse is currently considering a a project that will produce cash flows at 12,000 dollars a year for three years followed by 6,500 in year 4. The cost of the project is 38,000.
Required:
Question: What is the profability index if the discount rate is 7 percent.
A. 0.96
B. 0.99
C. 1.04
D. 1.09
E. 1.12
Note: Please show basic calculation