What the profitability index for the investment is

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Reference no: EM132528270

The management of Tony Corporation is considering the purchase of a new machine costing $400,000. No residual value is expected. The company's desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively.

In addition to the foregoing information the following data is available.

Question 1: The profitability index for this investment is:

Option A. 1.45

Option B. .88

Option C. 1.14

Option D. .70

Reference no: EM132528270

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