Compute the PI Statistic for Project Q and Advise the Firm

question 71

Multiple Choice

Compute the PI statistic for Project Q 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 12 percent.
Project Q

• A)The project's PI is -8.70 percent and the project should be rejected.
• B)The project's PI is -11.70 percent and the project should be rejected.
• C)The project's PI is 3.70 percent and the project should be accepted.
• D)The project's PI is 5.70 percent and the project should be accepteD.Step 1: Find NPV using financial calculator: NPV = -86.95; Step 2: -86.95/1,000 = -8.70 percent and since PI < 0 reject.

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Definitions:

Resistance

The opposition or counteracting force encountered during physical exercises or in the context of infectious agents battling against the immune response.

Exhaustion

A state of extreme physical or mental fatigue, often resulting from stress, overwork, illness, or lack of sleep.

Fight-or-Flight Response

An instinctual survival mechanism that prepares the body to either confront or flee from immediate threats, activating the sympathetic nervous system.

Autonomic Nervous System

The part of the nervous system that controls involuntary bodily functions, such as heart rate, digestion, and respiration.