Compute the PI Statistic for Project Z and Advise the Firm

question 33

Multiple Choice

Compute the PI statistic for Project Z and advise the firm whether to accept or reject the project with the cash flows shown as follows if the appropriate cost of capital is 10 percent.
Project Z

• A)The project's PI is 8.48 percent and the project should be accepted.
• B)The project's PI is 8.48 percent and the project should be rejected.
• C)The project's PI is 16.48 percent and the project should be accepted.
• D)The project's PI is 21.48 percent and the project should be accepteD.Step 1: Find NPV using financial calculator: NPV = 214.78; Step 2: 214.78/1,000 = 21.48 percent and since PI > 0 accept.

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Definitions:

Technological Resources

Tools and systems that utilize technology to support various activities, including information access, communication, and operational efficiency.

Financial Viability

The ability of an entity or project to generate sufficient revenue to cover its expenses and achieve long-term sustainability.

Revenue

The total amount of income generated by the sale of goods or services related to a company's primary operations.

Cost Structures

The composition of fixed and variable costs that a company incurs during its operations, impacting its profitability.