Question
Flos Flowers has a project costing $40,000 and cash flows of $8,500, $15,600, and $22,700 for Years 1 to 3, respectively. Based on the profitability
Flos Flowers has a project costing $40,000 and cash flows of $8,500, $15,600, and $22,700 for Years 1 to 3, respectively. Based on the profitability index rule, should the project be accepted if the discount rate is 9.5 percent? Why or why not?
A. Yes; because the PI is .95
B. No; because the PI is .95
C. Yes; because the PI is 1.03
D. Yes; because the PI is negative
E. No; because the PI is 1.03
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Handbook Of Income Distribution Volume 2B
Authors: Anthony B. Atkinson, Francois Bourguignon
1st Edition
0444594299, 978-0444594297
