Based on the Profitability Index Rule,should a Project with the Following

question 44

Multiple Choice

Based on the profitability index rule,should a project with the following cash flows be accepted if the discount rate is 14 percent? Why or why not?

• A)Yes; The PI is 0.96.
• B)Yes; The PI is 0.80.
• C)Yes; The PI is 1.08.
• D)No; The PI is 0.96.
• E)No; The PI is 0.80.

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Definitions:

Interest

The cost of borrowing money or the return earned on an investment, typically expressed as a percentage.

Accounting Period

A specific time period at the end of which an organization prepares financial statements.

Income Statement

A financial statement that shows a company’s revenues and expenses over a specific period, illustrating how the revenues are transformed into net income or loss.

Financial Condition

A snapshot of a company's financial health, encompassing assets, liabilities, equity, and liquidity at a specific point in time.