Compute the PI Statistic for Project X and Note Whether

question 52

Multiple Choice

Compute the PI statistic for Project X and note whether the firm should accept or reject the project with the cash flows shown as follows if the appropriate cost of capital is 10 percent.
$$\begin{array} { | l | c | c | c | c | c | c | c | } \hline \text { Time: } & 0 & 1 & 2 & 3 & 4 & 5 \\\hline \text { Cash flow: } & - 250 & 75 & 0 & 100 & 75 & 50 \\\hline\end{array}$$

• A)(-0.0977 percent, reject)
• B)(-9.77 percent, reject)
• C)(-24.41 percent, reject)
• D)24.41 percent, accept

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Definitions:

Mean Age

The average age of the individuals in a given population or group, calculated by dividing the sum of their ages by the number of individuals.

Effect Size

A quantitative measure of the strength of a phenomenon, used to ascertain the practical significance of research findings.

Statistically Significant

A determination that a result from data analysis has a low probability of occurring by chance, indicating a meaningful difference or relationship.

Practical Importance

Refers to the relevance and applicability of an idea, research finding, or theory to real-world situations.