You Are Considering Two Independent Projects Both of Which Have $8 \%$

question 38

Multiple Choice

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.

---

Definitions:

Financial Remuneration

Payment for work or services, including salaries, wages, bonuses, or other forms of compensation.

Exchange

The trade of things of value between buyer and seller so that each is better off after the trade.

MBA

Master of Business Administration, a graduate degree that focuses on business administration and investment management.

Marketing Exchange

The process by which two or more parties trade goods, services, or ideas in a way that benefits both sides, often involving monetary transactions.