Nelson's Industrial Supply is considering a project that has projected cash inflows of $6,000 a year for 4 years. The initial cost of the project is $16,800 and the required return is 12.75 percent. Should this project be accepted based on the profitability index criterion? Why or why not? a. no; because the Pl is .58 b. yes; because the PI is .58 c. yes; because the PI is 1.07 d. no; because the PI is 1.07
Nelson's Industrial Supply is considering a project that has projected cash inflows of $6,000 a year for 4 years. The initial cost of the project is $16,800 and the required return is 12.75 percent. Should this project be accepted based on the profitability index criterion? Why or why not? a. no; because the Pl is .58 b. yes; because the PI is .58 c. yes; because the PI is 1.07 d. no; because the PI is 1.07
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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