You Are Considering the Following Two Mutually Exclusive Projects

question 21

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. Should you accept or reject these projects based on the profitability index?

• A)accept Project A and reject Project B
• B)reject Project A and accept Project B
• C)accept both Projects A and B
• D)reject both Projects A and B
• E)You cannot make this decision based on the profitability index.

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Definitions:

Short Term Liabilities

Short Term Liabilities are obligations a company needs to pay within a year, including loans, accounts payable, and other debts.