You Estimate That a Project Will Cost $33,700 and Will

Multiple Choice

You estimate that a project will cost $33,700 and will provide cash inflows of $14,800 in Year 1 and $24,600 in Year 3. Based on the profitability index rule, should the project be accepted if the discount rate is 14.2 percent? Why or why not?

A) Yes; The PI is .87.
B) Yes; The PI is .93.
C) Yes; The PI is 1.06.
D) No; The PI is 1.06.
E) No; The PI is .87.