Based on the Profitability Index (PI) Rule, Should a Project

question 238

Multiple Choice

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?

• A) Yes; because the PI is 1.008
• B) Yes; because the PI is.992
• C) Yes; because the PI is.999
• D) No; because the PI is 1.008
• E) No; because the PI is.992

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Definitions:

Hurricane

A type of tropical cyclone characterized by low-pressure centers, strong winds, and heavy rain, capable of causing significant weather-related disasters.

Contingency Plan

A contingency plan is a proactive strategy or protocol designed to be implemented in response to potential unforeseen events or emergencies.

Strategic Plans

A systematic process for defining long-term organizational goals, actions needed to achieve those goals, and resource allocation to execute those actions.

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Short-term, specific planning that links strategic goals and objectives to operational activities.