Suppose Your Firm Is Considering Investing in a Project with the Cash

Multiple Choice

Suppose your firm is considering investing in a project with the cash flows shown as follows,that the required rate of return on projects of this risk class is 8 percent,and that the maximum allowable payback and discounted payback statistics for the project are three and a half and four and a half years,respectively.Use the PI decision to evaluate this project; should it be accepted or rejected?

A) PI = 6.94 percent; reject the project
B) PI = 7.52 percent; reject the project
C) PI = 23.61 percent; accept the project
D) PI = 35.33 percent; accept the project