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Zellar's, Inc. Is considering two mutually exclusive projects, A and B. Project A costs $ 75,000 and is expected to generate $48,000 in year one and $45,000 in year two. Project B costs $80,000 and is expected to generate $34,000 on year one, $37,000 in year two, $26,000 in year three, and $25,000 in year four. Zellar, Inc.'s required rate of return for these projects is 10%. The profitability index for Project A is ________

a) 1.47

b) 1.22

c) 1.13

d) 1.08

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M989633

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