Compute the PI Statistic for Project Z and Advise the Firm

question 17

Multiple Choice

Compute the PI statistic for Project Z and advise the firm whether to accept or reject the project with the cash flows shown below if the appropriate cost of capital is 10 percent. Project Z

• A) The project's PI is 8.48% and the project should be accepted.
• B) The project's PI is 8.48% and the project should be rejected.
• C) The project's PI is 16.48% and the project should be accepted.
• D) The project's PI is 21.48% and the project should be accepteD.Step 1: Find NPV using financial calculator: NPV = 214.78; Step 2: 214.78/1000 = 21.48% and since PI>0 accept.

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