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Compute the PI statistic for Project X and note whether the firm should accept or reject the project with the cash flows shown as follows
Compute the PI statistic for Project X and note whether the firm should accept or reject the project with the cash flows shown as follows if the appropriate cost of capital is 10%.
Time | 0 | 1 | 2 | 3 | 4 | 5 |
Cash Flow | -250 | 75 | 0 | 100 | 75 | 50 |
a) 2.41, accept
b) 0.023, reject
c) 0.90, reject
d) 1.97, accept
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