You Are Considering Two Independent Projects Both of Which Have

question 80

Multiple Choice

You are considering two independent projects both of which have been assigned a discount rate of 15 percent.Based on the profitability index,what is your recommendation concerning these projects?

$\begin{array}{l}\text { Project A }\\\begin{array}{cc}\text { Year } & \text { Cash Flow } \\\hline 0 & -\$ 46,000 \\1 & \$ 32,000 \\2 & \$ 27,000\end{array}\end{array}$ $\begin{array}{l}\text { Project B }\\\begin{array}{cc}\text { Year } & \text { Cash Flow } \\\hline 0 & -\$ 50,000 \\1 & \$ 18,000 \\2 & \$ 54,000\end{array}\end{array}$

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Definitions:

Athletic Shoe Companies

Businesses that specialize in designing, manufacturing, and selling footwear designed for sports and physical activities.

Strategic Considerations

Refers to the long-term planning and decision-making factors that influence the success and direction of an organization or domain.

Antitrust Laws

Legislation intended to promote competition and prevent monopolies by regulating corporate behaviors and mergers.

Purpose

The reason for which something is done or created or for which something exists.