As per the price/earnings ratio method,a company should adopt a project when:

Question

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The price/earnings ratio method suggests that a company should adopt a project when the ratio of its initial cost-to-earnings is lower than the price to earnings ratio of the comparison investment. This means that the cost of the project should be relatively low compared to the earnings it is expected to generate, in comparison to the earnings generated by other investment options.

As Per the Price/earnings Ratio Method,a Company Should Adopt a Project