Question: Based on the profitability index (PI) rule, should a project with the following cash flows be accepted if the discount rate is 8% ? Why

Based on the profitability index (PI) rule, should a project with

Based on the profitability index (PI) rule, should a project with the following cash flows be accepted if the discount rate is 8% ? Why or why not? Year Cash Flow 0 -$18,600 1 $10,000 2 $ 7,300 3 $ 3,700 Yes; because the Pl is 1.008 O Yes; because the Plis.992 O Yes; because the Pl is 999 O No; because the Pl is 1.008 O No; because the Plis.992

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

1. You are a LNC working for a criminal defense attorney. The case that you are working on involves defending a local physician who is alleged to have been diluting and adulterating medications...

It will cost $4,500 to acquire a small ice cream cart. Cart sales are expected to be $1,800 a year for three years. After the three years, the cart is expected to be worthless as that is the expected...

Based on the profitability index (PI) rule, should a project with the following cash flows be accepted if the discount rate is 11 percent? Why or why not? A. Yes; The PI is .91. B. Yes; The PI is...

Based on the profitability index (PI) rule, should a project with the following cash flows be accepted if the discount rate is 8%? Why or why not? yes; because the PI is 1.008. yes; because the PI is...

do all 9. An investment with an initial cost of $15,000 produces cash flow is evenly spread out over the year and the firm period is A,3- years. C.3.75 E. 5 cash flows of $5,000 annually for 5 years...

8 Based on the profitability index (PI) rule, should a project with the following cash flows be accepted if the discount rate is Year percent? Why or why not? Cash Flow -$19,400 11,000 $12,000 A B C...

QUESTION 1 A four-year project has an initial outlay of $100,000. The future cash inflows from its project are $50,000 for years one and two and $40,000 for years three and four. Given a discount...

8. Based on the profitability index (PI) rule, should a project with the following cash flows be accepted if the discount rate is 8 percent? Why or why not? Year Cash Flow -S18.600 S10.000 $ 7.300 $...

Based on the profitability index (PI) rule, should a project with the following cash flows be accepted if the discount rate is 8 %? Why or why not? Year Cash Flow 0 -$42,700 1 $16,800 2 $23,300 3...

Please explain your answer -Based on the profitability index (PI) rule, should a project with the following cash flows be accepted if the discount rate is 8 percent? Why or why not? Cash Flow...

Based on the profitability index (PI) rule, should a project with the following cash flows be accepted if the discount rate is 8%? Why Year or why not? Cash Flow $18,600 S10,000 I$7,300 I$3,700 2...

A physics student is sitting in a parked car just off a busy roadway. She measures the traffic noise and finds that shutting the car windows reduces the intensity of the traffic sound to 1.0% of what...

A model for the movement of a stock supposes that if the present price of the stock is s, then, after one period, it will be either us with probability p or ds with probability 1 p. Assuming that...

If you make too much money, whether you are a Single or Married, you cannot contribute to a Roth IRA.

A company is preparing completing their Cash Budget. The following data has been prepared for cash receipts and payments. January February March Cash receipts $1,061,200 $1,182,400 $1,091,700 Cash...