Multiple Choice
Flo's Flowers has a proposed project with an initial cost of $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 1.03
B) Yes; because the PI is .95
C) Yes; because the PI is negative
D) No; because the PI is 1.03
E) No; because the PI is .95
Correct Answer:
Verified
Correct Answer:
Verified
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