You are considering the following two mutually exclusive projects with the following cash flows. Both projects will be depreciated using straight-line depreciation to a zero book value over the life of the project. Neither project has any salvage value. You should accept Project ____ because it has the _____ profitability index of the two projects.
A) A; higher
B) A; lower
C) B; higher
D) B; lower
E) The profitability index should not be used to determine which of these projects should be accepted.

Question

You are considering the following two mutually exclusive projects with the following cash flows. Both projects will be depreciated using straight-line depreciation to a zero book value over the life of the project. Neither project has any salvage value.   You should accept Project ____ because it has the _____ profitability index of the two projects.
A) A; higher 
B) A; lower 
C) B; higher 
D) B; lower 
E) The profitability index should not be used to determine which of these projects should be accepted.

Quizplus · Accepted Answer

The Answer of You are considering the following two mutually exclusive projects with the following cash flows. Both projects will be depreciated using straight-line depreciation to a zero book value over the life of the project. Neither project has any salvage value.   You should accept Project ____ because it has the _____ profitability index of the two projects.
A) A; higher 
B) A; lower 
C) B; higher 
D) B; lower 
E) The profitability index should not be used to determine which of these projects should be accepted.

You Are Considering the Following Two Mutually Exclusive Projects with the Following