1. Compute the PI statistic for Project X and note whether the firm should accept or reject the project with the cash flows shown below if the appropriate cost of capital is 8 percent.

Time: 0 1 2 3 4 5

Cash flow: -82 -82 0 107 82 57.

2. Compute the Discounted Payback statistic for Project X and recommend whether the firm should accept or reject the project with the cash flows shown below if the appropriate cost of capital is 14 percent and the maximum allowable discounted payback is 3 years.

Time: 0 1 2 3 4 5

Cash flow: -960 310 670 590 490 340