23. Write On! has a proposed project with an initial cost of $101,000 and cash flows...

Transcribed Image Text:

23. Write On! has a proposed project with an initial cost of $101,000 and cash flows of $74,000 per for Years 1 to 5. At the end of the Year 5 there will be an additional net cash inflow of $68,000. Based on the profitability index rule, should the project be accepted if the discount rate is 12.5 percent? Why or why not? A) Yes; because the PI is 2.2 B) Yes; because the PI is 3.0 C) Yes; because the PI is 2.6 D) No; because the PI is 0.8 E) No; because the PI is 3.3 23. Write On! has a proposed project with an initial cost of $101,000 and cash flows of $74,000 per for Years 1 to 5. At the end of the Year 5 there will be an additional net cash inflow of $68,000. Based on the profitability index rule, should the project be accepted if the discount rate is 12.5 percent? Why or why not? A) Yes; because the PI is 2.2 B) Yes; because the PI is 3.0 C) Yes; because the PI is 2.6 D) No; because the PI is 0.8 E) No; because the PI is 3.3

Answer rating: 100% (QA)

To determine whether the project should be accepted based on the profitability index PI rule we need ... View the full answer