You Estimate That a Project Will Cost $33,700 and Will

question 108

Multiple Choice

You estimate that a project will cost $33,700 and will provide cash inflows of $14,800 in Year 1 and $24,600 in Year 3. Based on the profitability index rule, should the project be accepted if the discount rate is 14.2 percent? Why or why not?

• A) Yes; The PI is .87.
• B) Yes; The PI is .93.
• C) Yes; The PI is 1.06.
• D) No; The PI is 1.06.
• E) No; The PI is .87.

Understand the rights and liabilities of parties involved in negotiable instruments.

Identify different types of endorsements and their implications for negotiable instruments.

Recognize the roles of drawer, acceptor, and endorser in a bill of exchange.

Comprehend the effects of certified cheques on the relationship between the drawer and the payee.

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Definitions:

Book Value

The net value of a company's assets as recorded on its balance sheet, subtracting liabilities from total assets.

Fair Value

The price that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Mortgage

A loan used to purchase property, where the property itself serves as collateral until the loan is paid off.

Book Value

The value of an asset as recorded on the balance sheet, calculated as the cost of an asset minus accumulated depreciation.