Use the following mutually exclusive investment cash flows for the question(s) below: If the discount rate is 14%, using profitability index 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, project A is preferable
D) Both projects would be rejected based on the PI criterion
E) Based on the two PI's, it is obvious the IRR for both projects is less than 14%

Question

Use the following mutually exclusive investment cash flows for the question(s) below:  If the discount rate is 14%, using profitability index 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, project A is preferable 
D) Both projects would be rejected based on the PI criterion 
E) Based on the two PI's, it is obvious the IRR for both projects is less than 14%

Quizplus · Accepted Answer

The Answer of Use the following mutually exclusive investment cash flows for the question(s) below:  If the discount rate is 14%, using profitability index 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, project A is preferable 
D) Both projects would be rejected based on the PI criterion 
E) Based on the two PI's, it is obvious the IRR for both projects is less than 14%

Use the Following Mutually Exclusive Investment Cash Flows for the Question(s)