Compute the PI Statistic for Project Q and Advise the Firm

question 90

Multiple Choice

Compute the PI statistic for Project Q and advise the firm whether to accept or reject the project with the cash flows shown below if the appropriate cost of capital is 12 percent. Project Q

• A) The project's PI is -8.70% and the project should be rejected.
• B) The project's PI is -11.70% and the project should be rejected.
• C) The project's PI is 3.70% and the project should be accepted.
• D) The project's PI is 5.70% and the project should be accepteD.Step 1: Find NPV using financial calculator: NPV = -86.95; Step 2: -86.95/1000 = -8.70% and since PI<0 reject.

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Definitions:

Cognitive Therapy

A form of psychotherapy that focuses on changing negative thought patterns to improve emotions and behaviors.

Aaron Beck

A psychiatrist known as one of the founders of cognitive therapy, Beck developed influential psychological models of depression and proposed the cognitive triad of negative thought patterns.

Negative Thoughts

Cognitive processes characterized by pessimism, criticism, or despair, which can impact emotional well-being and mental health.

Schizophrenia

A mental disorder characterized by distorted thinking, perceptions, emotions, and behavior.