Juan Is Considering Two Independent Projects

question 61

Multiple Choice

Juan is considering two independent projects.Project A costs $74,600 and has projected cash flows of $18,700,$46,300,and $12,200 for Years 1 to 3,respectively.Project B costs $70,000 and has cash flows of $10,600,$15,800,and $67,900 for Years 1 to 3,respectively.Juan assigns a discount rate of 10 percent to Project A and 12 percent to Project B.Which project or projects,if either,should he accept based on the profitability index rule?

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

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Definitions:

Neural Impulse

An electrical signal that travels along a neuron, facilitating communication between the brain and other parts of the body.

Myelin Sheath

A protective covering made of fatty substances and proteins that surrounds the axons of many neurons, enhancing the speed of nerve impulse transmission.

Neuron Structure

Describes the anatomy of a neuron, including parts such as the cell body, dendrites, axon, and synaptic terminals, which facilitate nerve impulse transmission.

Electrical Cord

A flexible cable comprised of one or more electrical conductors, typically encased in insulation, used to transmit power.