Compute the PI Statistic for Project X and Note Whether $$\begin{array} { l l l l l l l } \text { Time: } & 0 & 1 & 2 & 3 & 4 & 5 \\\text { Cash flow: } & - 75 & - 75 & 0 & 100 & 75 & 50\end{array}$$

question 97

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. $$\begin{array} { l l l l l l l } \text { Time: } & 0 & 1 & 2 & 3 & 4 & 5 \\\text { Cash flow: } & - 75 & - 75 & 0 & 100 & 75 & 50\end{array}$$

• A)10 percent, reject
• B)14.22 percent, accept
• C)13.26 percent, accept
• D)18.96 percent, accept

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Definitions:

CISG

The United Nations Convention on Contracts for the International Sale of Goods, a treaty that establishes a uniform legal framework for international commerce.

Conforming Goods

Products that meet the specifications and standards outlined in a contract of sale.

Perfect Tender Rule

A principle in the Uniform Commercial Code requiring goods delivered under a sales contract to exactly meet the terms of the agreement.

Norms

Established standards of behavior or guidelines that are considered normal within a society or group.