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Compute the PI statistic for Project Z if the appropriate cost of capital is 6 percent....

Compute the PI statistic for Project Z if the appropriate cost of capital is 6 percent. (Do not round intermediate calculations and round your final answer to 2 decimal places.) Project Z Time: 0 1 2 3 4 5 Cash flow –$3,100 $690 $820 $990 $640 $440

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Answer #1

Solution:

PV of cash inflow=

PV of cash inflow= 3047.52

PI =( PV of cash inflow)/initial investment

PI = 3047.52/3100

PI= 0.983

The project should be rejected as PI is less than one

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