You are considering two independent projects both of which have been assigned a discount rate of 8%.Based on the profitability index,what is your recommendation concerning these projects?
A)You should accept both projects since both of their PIs are positive.
B)You should accept project A since it has the higher PI.
C)You should accept both projects since both of their PIs are greater than 1.
D)You should only accept project B since it has the largest PI and the PI exceeds 1.
E)Neither project is acceptable.

Question

You are considering two independent projects both of which have been assigned a discount rate of 8%.Based on the profitability index,what is your recommendation concerning these projects? 
A)You should accept both projects since both of their PIs are positive. 
B)You should accept project A since it has the higher PI. 
C)You should accept both projects since both of their PIs are greater than 1. 
D)You should only accept project B since it has the largest PI and the PI exceeds 1. 
E)Neither project is acceptable.

Quizplus · Accepted Answer

Because the projects are independent and their PIs exceed 1.0,both projects should be accepted.

You Are Considering Two Independent Projects Both of Which Have