A project is expected to last ten years with an initial cost of $10,000.00. Assuming the present value payback method produces a value of 7.25 years and there are no additional costs beyond the initial cost, the PI is ____.

Question

Quizplus · Accepted Answer

Since the present value payback period (PVPB) is less than 10 years, the net present value (NPV) should be positive for the PI to be greater than 1. Since there are no additional costs beyond the initial cost, the PI will be greater than 1. Therefore, option B is the correct answer.

A Project Is Expected to Last Ten Years with an Initial