Project January has a NPV of $50,000,and project December has a NPV of $40,000.Which of the following circumstances could make it possible to choose December over January?

Question

Quizplus · Accepted Answer

If the projects have unequal lives, it is possible that project December has a higher profitability index (PI) than project January. PI adjusts for the length of the project and shows how much return is expected per unit of investment. Therefore, even though project January has a higher NPV, project December may have a higher PI and be the better choice. Choices A, B, and D do not provide enough information to choose one project over the other.

Project January Has a NPV of $50,000,and Project December Has