You are considering the following two mutually exclusive projects. 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.
Based upon the profitability index (PI) and the information provided in the problem, you should:
A) Accept both project A and project B.
B) Accept project A and reject project B.
C) Accept project B and reject project A.
D) Reject both project A and project B.
E) Disregard the PI method in this case.

Question

You are considering the following two mutually exclusive projects. 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.
  Based upon the profitability index (PI) and the information provided in the problem, you should:
A) Accept both project A and project B. 
B) Accept project A and reject project B. 
C) Accept project B and reject project A. 
D) Reject both project A and project B. 
E) Disregard the PI method in this case.

Quizplus · Accepted Answer

The Answer of You are considering the following two mutually exclusive projects. 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.
  Based upon the profitability index (PI) and the information provided in the problem, you should:
A) Accept both project A and project B. 
B) Accept project A and reject project B. 
C) Accept project B and reject project A. 
D) Reject both project A and project B. 
E) Disregard the PI method in this case.

You Are Considering the Following Two Mutually Exclusive Projects