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number 26 ro@gradesavers.com by issuer 514.849.2586 A 230 TRODUCTION TO FINANCIAL MANAGEMENT 26. Based on the profitability index rule, should a project with the following
number 26
ro@gradesavers.com by issuer 514.849.2586 A 230 TRODUCTION TO FINANCIAL MANAGEMENT 26. Based on the profitability index rule, should a project with the following cash flows be accepted if the discount rate is 14 percent? Why or why not? Year Cash Flow -$32,100 $11,800 $0 $22,600 a) Yes; The PI is 1.08. b) Yes; The PI is 0.96. c) Yes; The PI is 0.80. d) No; The PI is 0.96. e) No; The PI is 0.80. 27. It will cost $6,000 to acquire an ice cream cart. Cart sales are expected to be $3,600 a year for three years. After the three years, the cart is expected to be worthless as the expected life of the refrigeration unit is only three years. What is the payback period (6000 16000 (2400) 3600 -1200 a) 1.48 years b) 1.67 years c) 1.82 years d) 1.95 years e) 2.00 years -IN 3600 2400 ANAGEMENT 1 "next dwinStep by Step Solution
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