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Compute the PI statistic for Project Z and advise the firm whether to accept or reject the project with the cash flow shown as follows if the appropriate cost of capital is 10 percent. (Do not round intermediate calculations and round your final answer to 2 decimal places.)
Project Z | ||||||
Time: | 0 | 1 | 2 | 3 | 4 | 5 |
Cash flow: | –$1,000 | $350 | $380 | $420 | $300 | $100 |
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Here are the four answer options provided for this question:
(a) The project's PI is 21.48 percent and the project should be accepted.
(b) The project's PI is 16.48 percent and the project should be accepted.
(c) The project's PI is 8.48 percent and the project should be accepted.
(d) The project's PI is 8.48 percent and the project should be rejected.
Here are the four answer options provided for this question:
(a) The project's PI is 21.48 percent and the project should be accepted.
(b) The project's PI is 16.48 percent and the project should be accepted.
(c) The project's PI is 8.48 percent and the project should be accepted.
(d) The project's PI is 8.48 percent and the project should be rejected.
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