When two or more normal ____ projects are under consideration, the profitability index, the net present value, and the internal rate of return methods will yield identical accept/reject signals.
A) coincident
B) mutually exclusive
C) independent
D) none of the above

Question

Quizplus · Accepted Answer

The profitability index, net present value, and internal rate of return methods are all based on the time value of money and consider the cash inflows and outflows of a project over time. When two or more independent normal projects are being evaluated, these methods will yield identical acceptance or rejection signals. However, for mutually exclusive projects, the methods can lead to different decisions as they involve direct comparison to choose the best project. Therefore, option C is the best choice.

When Two or More Normal ____ Projects Are Under Consideration