If the discount rate is 14% and the firm has limited funds, which of the following is true?
A) The PI of project A is less than 1.0.
B) The PI of project B is less than 1.0.
C) Based on the PI rule, project A is preferable.
D) Both projects would be rejected based on the PI rule.
E) The project with the smaller initial investment always has the higher PI.

Question

If the discount rate is 14% and the firm has limited funds, which of the following is true?
A) The PI of project A is less than 1.0. 
B) The PI of project B is less than 1.0. 
C) Based on the PI rule, project A is preferable. 
D) Both projects would be rejected based on the PI rule. 
E) The project with the smaller initial investment always has the higher PI.

Quizplus · Accepted Answer

The Answer of  If the discount rate is 14% and the firm has limited funds, which of the following is true?
A) The PI of project A is less than 1.0. 
B) The PI of project B is less than 1.0. 
C) Based on the PI rule, project A is preferable. 
D) Both projects would be rejected based on the PI rule. 
E) The project with the smaller initial investment always has the higher PI.

If the Discount Rate Is 14% and the Firm Has