Use the Following Mutually Exclusive Investment Cash Flows for the Question(s)

question 91

Multiple Choice

Use the following mutually exclusive investment cash flows for the question(s) below: If the discount rate is 14%, using profitability index which of the following is true?

• A) The PI of project A is less than 1.0
• B) The PI of project B is less than 1.0
• C) Based on the PI, project A is preferable
• D) Both projects would be rejected based on the PI criterion
• E) Based on the two PI's, it is obvious the IRR for both projects is less than 14%