Jefferson International is trying to choose between the following two mutually exclusive design projects: The required return is 12 percent.If the company applies the profitability index (PI)decision rule,which project should the firm accept?
If the company applies the NPV decision rule,which project should it take?
Given your first two answers,which project should the firm actually accept?
A)Project A; Project B; Project A
B)Project A; Project B; Project B
C)Project B; Project A; Project A
D)Project B; Project A; Project B
E)Project B; Project B, Project B

Question

Jefferson International is trying to choose between the following two mutually exclusive design projects:  The required return is 12 percent.If the company applies the profitability index (PI)decision rule,which project should the firm accept?
If the company applies the NPV decision rule,which project should it take?
Given your first two answers,which project should the firm actually accept?
A)Project A; Project B; Project A 
B)Project A; Project B; Project B 
C)Project B; Project A; Project A 
D)Project B; Project A; Project B 
E)Project B; Project B, Project B

Quizplus · Accepted Answer

The firm should select Project A because the PI rule should not be applied to mutually exclusive projects.

Jefferson International Is Trying to Choose Between the Following Two