You are analysing a proposed project and have
compiled the following information in relation to annual returns: Year Cash flow 0    -€145,000

                                        1    € 33,400

                                        2    € 70,500

                                        3    € 82,100 The required profitability index is 1.1.   Should
the proposed project be accepted based on simple payback? Why or why not?

Question

You are analysing a proposed project and have
compiled the following information in relation to annual returns:                                       Year  Cash flow                                         0    -€145,000

1      € 33,400

2      € 70,500

3      € 82,100 The required profitability index is 1.1.   Should
the proposed project be accepted based on simple payback? Why or why not?

Accepted Answer

Yes. The calculated profitability index is acceptable.

Answer

Net present value is positive.

Answer

The profitability index does not apply in this case.

Answer

No. The calculated profitability index is insufficient.

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You are analysing a proposed project and have compiled the following informatio...

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