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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 ( PI) rule, should the project be accepted if the discount rate is 9.5 percent? Why or why not

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 ( PI) rule, should the project be accepted if the discount rate is 9.5 percent? Why or why not

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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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 ( PI) rule, should the project be accepted if the discount rate is 9.5 percent? Why or why not
Transcribed Image Text: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 ( PI) rule, should the project be accepted if the discount rate is 9.5 percent? Why or why not
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