Flo's Flowers Has a Proposed Project with an Initial Cost

question 47

Multiple Choice

Flo's Flowers has a proposed project with an initial cost of $40,000 and cash flows of $8,500,$15,600,and $22,700 for Years 1 to 3,respectively.Based on the profitability index rule,should the project be accepted if the discount rate is 9.5 percent? Why or why not?

• A)Yes; because the PI is 1.03
• B)Yes; because the PI is .95
• C)Yes; because the PI is negative
• D)No; because the PI is 1.03
• E)No; because the PI is .95

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Definitions:

Demonstrating Empathy

The act of showing understanding and sharing the feelings of another individual, which can facilitate communication and relationship building.

Displaying Expertise

Demonstrating or showcasing one's skills, knowledge, or proficiency in a particular area or field.

Third-Party Interventions

Involvement by an outside party to mediate, facilitate, or impose solutions in conflicts or negotiations.

Preventive ADR Systems

Stands for systems designed to prevent disputes through early resolution techniques, avoiding litigation and arbitration.