Nelson's Industrial Supply is considering a project that has projected cash inflows of $6,000 a year for 4 years. The initial cost of the project is $16,800 and the required return is 12.75 percent. Should this project be accepted based on the profitability index criterion? Why or why not? a. no; because the Pl is .58 b. yes; because the PI is .58 c. yes; because the PI is 1.07 d. no; because the PI is 1.07

Nelson's Industrial Supply is considering a project that has projected cash inflows of $6,000 a year for 4 years. The initial cost of the project is $16,800 and the required return is 12.75 percent. Should this project be accepted based on the profitability index criterion? Why or why not? a. no; because the Pl is .58 b. yes; because the PI is .58 c. yes; because the PI is 1.07 d. no; because the PI is 1.07

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 10P: Project S has a cost of $10,000 and is expected to produce benefits (cash flows) of $3,000 per year...

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