(Ignore income taxes in this problem.) The management of Pattee Corporation is considering three investment projects-M, N, and O. Project M would require an investment of $25,000, Project N of $67,000, and Project O of $70,000. The present value of the cash inflows would be $28,750 for Project M, $73,700 for Project N, and $79,100 for Project O.

The profitability index of investment project N is closest to:

A. 0.10

B. 0.90

C. 0.09

D. 1.10

D. 1.10

Explanation:

The formula to compute the profitability index is shown below:

Profitability index = present value ÷ investment required

where,

Present value is $73,700

And, the investment required is $67,000

So by placing the values to the above formula

The profitability index is

= $73,700 ÷ $67,000

= 1.10

We simply applied the above formula

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.