NC Products Inc. is considering investing in one of two projects. Both projects have a net present value of $25,000; however, Project #1 requires an initial investment of $300,000 while Project #2 requires an initial investment of $700,000. Based on this information, which of the following statements is true?
A) Project #2 will have a higher profitability index.
B) Project #1 will have a higher profitability index.
C) Both projects will have the same profitability index.
D) There is not enough information to determine the profitability index of either project.
Correct Answer:
Verified
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