Using the profitability index, which of the following mutually exclusive projects should be accepted?
Project A: NPV = $6,000;NINV = $50,000
Project B: NPV = $10,000;NINV = $120,000
Project C: NPV = $8,000;NINV = $80,000
A)A
B)B
C)C
D)all projects should be accepted

Question

Quizplus · Accepted Answer

PIA = $56/$50 = 1.12
PIB = $130/$120 = 1.08
PIC = $88/$80 = 1.1
Therefore, choose project A

Using the Profitability Index, Which of the Following Mutually Exclusive