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

question 55

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%

---

Definitions:

Feasibility Determination

The process of assessing the practicality and viability of a proposed project or system.

Initial Experimentation

The preliminary phase of trying or testing new ideas, processes, or products to assess their feasibility or effectiveness.

Idea Creation

is the process of generating new, innovative concepts or solutions within a business or creative context.

Environmental Hazards

Potential sources of danger to the environment and human health, including pollutants, chemicals, and natural events that pose risks.