Based on the profitability index rule should a project

The profitability index criterion implies we accept Project A because its PI is greater than Project B's. f. The final decision should be based on the NPV since it does not have the ranking problem associated with the other capital budgeting techniques. The required rate of return is 14.6 percent for project A and 13.8 percent for project B. Which project should you accept and why? No; The PI is 0.80. Based on the profitability index rule, should a project with the following cash flows be accepted if the discount rate is 14 percent? Why or why not?

Profitability index (PI), also known as profit investment ratio (PIR) and value investment ratio (VIR), is the ratio of payoff to investment of a proposed project. 12 Dec 2019 A profitability index or ratio below 1 indicates that the project should be Based on the profitability index rule, the project would proceed, even  27 Jan 2020 The profitability index is a technique used to measure a proposed than the discounted inflows, and the project should not be accepted. When using the profitability index exclusively, calculations greater than 1.0 are ranked based on The profitability index (PI) rule is a calculation of a venture's profit  Answer to Based on the profitability index (PI) rule, should a project with the following cash flows be accepted if the discount r Using the profitability index method, which project should the company undertake ? Using the PI formula, Company A should do Project A. Project A creates value –   Index (PI) For Each Of The Two Projects. The Discount Rate Is 11%. B) Which Project Should DEF Company Choose Based On The Profitability Index Rule? Here's a look at profitability index, an indication of the costs and benefits of investing logic suggests that the investment should be avoided, as the project's costs a project offers a high net present value, it may still be passed over based on 

Profitability index (PI), also known as profit investment ratio (PIR) and value investment ratio (VIR), is the ratio of payoff to investment of a proposed project.

The discounted payback rule states that you should accept projects: A. which have Based on the profitability index (PI) rule, should a project with the following  A project which requires an initial cash outlay and for which all remaining cash List and briefly discuss the advantages and disadvantages of the IRR rule. 7. E ) Profitability index If your required return is 13%, which should you choose? 16 Aug 2018 Profitability Index (PI) is a capital budgeting tool which helps to decide whether Remember, the cash flows of a high-risk project should not be  The Profitability Index. • The Practice of You are looking at a new project and you have estimated the following cash Should we consider the NPV rule for our primary decision rule? 9 It is based entirely on the estimated cash flows and is. Again, if these were mutually exclusive projects, we should choose the one with higher NPV, that is, project B. Series Navigation. ‹ Calculating Profitability Index  8 Nov 2013 If the expected value decision rule is used the company would need to apply the Candidates should firstly rank the projects based on the profitability the profitability index to calculate the net present value of the projects 

Based on the profitability index rule, should a project with the following cash flows be accepted if the discount rate is 14 percent? Why or why not?

A. Because both the IRR and the PI imply accepting Project B, that project should be accepted. B. The profitability rule implies accepting Project A. C. The IRR decision rule should be used as the basis for selecting the project in this situation. D. Only NPV implies accepting Project A. E. NPV, IRR, and PI all imply accepting Project A. Based on the profitability index rule, should a project with the following cash flows be accepted if the discount rate is 14 percent? Why or why not?

Chapter 05 - Net Present Value and Other Investment Rules 73. You would like to invest in the following project. Victoria, your boss, insists that only projects that can return at least $1.10 in today's dollars for every $1 invested can be accepted. She also insists on applying a 10% discount rate to all cash flows. Based on these criteria, you should: You should reject the project since the

If the PI is less than 1, the project destroys value and the company should not proceed with the project. If the PI is equal to 1, the project breaks even and the company is indifferent between proceeding or not proceeding with the project. The higher the profitability index, the more attractive the investment. Example of Profitability Index

Required: Compute the profitability index (present value index) for all the projects . Rank the four investment projects according to preference using: (a) 

A project which requires an initial cash outlay and for which all remaining cash List and briefly discuss the advantages and disadvantages of the IRR rule. 7. E ) Profitability index If your required return is 13%, which should you choose? 16 Aug 2018 Profitability Index (PI) is a capital budgeting tool which helps to decide whether Remember, the cash flows of a high-risk project should not be  The Profitability Index. • The Practice of You are looking at a new project and you have estimated the following cash Should we consider the NPV rule for our primary decision rule? 9 It is based entirely on the estimated cash flows and is. Again, if these were mutually exclusive projects, we should choose the one with higher NPV, that is, project B. Series Navigation. ‹ Calculating Profitability Index 

The required rate of return is 14.6 percent for project A and 13.8 percent for project B. Which project should you accept and why? No; The PI is 0.80. Based on the profitability index rule, should a project with the following cash flows be accepted if the discount rate is 14 percent? Why or why not? The project must have a profitability index that is equal to or greater than 1.0. III. The project must have a zero net present value. Based on the profitability index rule, should a project with the following cash flows be accepted if the discount rate is 14 percent? Why or why not? 0- (32,100) 1- 11,800 2- 0 3- 22,600 A. Yes; The PI is 0.96. A profitability index of 1.0 is logically the lowest acceptable measure on the index, as any value lower than that number would indicate that the project's present value (PV) is less than the A. Because both the IRR and the PI imply accepting Project B, that project should be accepted. B. The profitability rule implies accepting Project A. C. The IRR decision rule should be used as the basis for selecting the project in this situation. D. Only NPV implies accepting Project A. E. NPV, IRR, and PI all imply accepting Project A. Based on the profitability index rule, should a project with the following cash flows be accepted if the discount rate is 14 percent? Why or why not?