pt 1

Compute the PI statistic for Project Z if the appropriate cost of capital is 7 percent. (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Project Z
Time:	0	1	2	3	4	5
Cash flow	$1,400	$430	$560	$730	$380	$180

PI

Should the project be accepted or rejected?

	Accepted
	Rejected

pt2

Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 12 percent, and that the maximum allowable payback and discounted payback statistic for the project are 2 and 3 years, respectively.

Time	0	1	2	3	4	5	6
Cash Flow	-720	100	540	740	740	340	740

Use the PI decision rule to evaluate this project; should it be accepted or rejected?