Based on the Profitability Index (PI)rule,should a Project with the Following

question 87

Multiple Choice

Based on the profitability index (PI) rule,should a project with the following cash flows be accepted if the discount rate is 8% ? Why or why not?
$\begin{array}{|l|l|}\hline \text { Year } & \text { Cash Flow } \\\hline 0& -£ 18,600 \\\hline 1 & £ 10,000 \\\hline 2 & £ 7,300 \\\hline 3 & £ 3,700\\\hline \end{array}$

• A)yes; because the PI is 1.008
• B)yes; because the PI is .992
• C)yes; because the PI is .999
• D)no; because the PI is 1.008
• E)no; because the PI is .992

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