Project a Costs $47,800 with Cash Inflows of $34,200 in Year

question 61

Multiple Choice

Project A costs $47,800 with cash inflows of $34,200 in Year 1 and $28,700 in Year 2. Project B costs $63,200 with cash inflows of $21,900 in Year 1 and $59,200 in Year 2. These projects are independent and have an assigned discount rate of 15 percent. Based on the profitability index, what is your recommendation concerning these projects?

• A) Accept both projects
• B) Reject both projects
• C) Accept Project A and reject Project B
• D) Accept Project B and reject Project A 
• E) Accept either, but not both projects 

---

Definitions:

Earn More

The concept of increasing one's income or financial gain through various means such as employment, investment, or entrepreneurship.

Type II Error

The error that occurs when a false null hypothesis is not rejected.

Type I Error

A Type I Error occurs when a true null hypothesis is incorrectly rejected, also known as a "false positive".

Binomial Population

A population in which each member of the population has only two possible outcomes or states, often conceptualized as success or failure.