In the case of mutually exclusive projects, NPV and PI are likely to yield conflicting decisions when ____.
A) the projects require the same net investment
B) the projects differ significantly in size
C) multiple rates of return are a possibility
D) None of these are correct

Question

Quizplus · Accepted Answer

When projects differ significantly in size, NPV and PI (Profitability Index) can yield conflicting decisions because NPV does not consider the scale of the investment, while PI does by comparing the value created per unit of investment.

In the Case of Mutually Exclusive Projects, NPV and PI