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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 percent.
time | 0 | 1 | 2 | 3 | 4 | 5 |
Cash Flow | -75 | -75 | 0 | 100 | 75 | 50 |
A. 10.1896, accept
B. 2, accept
C. 1.1896, accept
D. 0.1896, reject
Note: WhenI calculated this I got answer D (0.1896) but since this is less than 1 it should be accepted. no?
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