Based on the Profitability Index (PI) Rule, Should a Project

question 84

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? $$\begin{array} { c c } \underline{\text { Year }} &\underline{ \text { Cash Flow }} \\ 0 & - \$ 18,600 \\1 & \$ 10,000 \\2 & \$ 7,300 \\3 & \$3,700\end{array}$$

• 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.

Understand percentage calculations and apply them to determine parts of a whole in various contexts.

Analyze real-world scenarios to calculate total sales, revenue, or expenditure based on given percentages.

Calculate the change in quantities, such as time or salary, resulting from percentage increases or decreases.

Identify the percentage composition of different categories within a total amount to analyze financial distributions.

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Definitions:

Long-term Care

Services and support for individuals who cannot perform basic daily activities due to chronic illnesses, disabilities, or the aging process.

Voidable Title

A legal concept that refers to a situation where the transfer of title to property can be invalidated by one of the parties involved, often due to misrepresentation or fraud.

Good Faith Purchaser

An individual who buys property without knowledge of any existing claims or defects against it, thereby acquiring legal rights to the property.

Minor

A person under the legal age of majority, often under 18, thus restricted in certain legal capacities.