Compute the PI statistic for Project Q and advise the firm whether to accept or reject the project with the cash flows shown as follows if the appropriate cost of capital is 12 percent.
Project Q

A)The project's PI is -8.70 percent and the project should be rejected.
B)The project's PI is -11.70 percent and the project should be rejected.
C)The project's PI is 3.70 percent and the project should be accepted.
D)The project's PI is 5.70 percent and the project should be accepteD.Step 1: Find NPV using financial calculator: NPV = -86.95; Step 2: -86.95/1,000 = -8.70 percent and since PI

Question

Compute the PI statistic for Project Q and advise the firm whether to accept or reject the project with the cash flows shown as follows if the appropriate cost of capital is 12 percent.
Project Q

A)The project's PI is -8.70 percent and the project should be rejected. 
B)The project's PI is -11.70 percent and the project should be rejected. 
C)The project's PI is 3.70 percent and the project should be accepted. 
D)The project's PI is 5.70 percent and the project should be accepteD.Step 1: Find NPV using financial calculator: NPV = -86.95; Step 2: -86.95/1,000 = -8.70 percent and since PI < 0 reject.

Quizplus · Accepted Answer

The PI statistic for Project Q is -8.70 percent, which is less than 0. Therefore, the project should be rejected.

Compute the PI Statistic for Project Q and Advise the Firm