You Are Considering the Following Two Mutually Exclusive Projects

question 204

Multiple Choice

You are considering the following two mutually exclusive projects. Both projects will be depreciated using straight-line depreciation to a zero book value over the life of the project.

Neither project has any salvage value.
Based upon the profitability index (PI) and the information provided in the problem, you should:

• A) Accept both project A and project B.
• B) Accept project A and reject project B.
• C) Accept project B and reject project A.
• D) Reject both project A and project B.
• E) Disregard the PI method in this case.

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