You Are Considering Two Independent Projects Both of Which Have

question 91

Multiple Choice

You are considering two independent projects both of which have been assigned a discount rate of 8%.Based on the profitability index, what is your recommendation concerning these projects?

• A)You should accept both projects since both of their PIs are positive.
• B)You should accept project A since it has the higher PI.
• C)You should accept both projects since both of their PIs are greater than 1.
• D)You should only accept project B since it has the largest PI and the PI exceeds 1.
• E)Neither project is acceptable.

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Definitions:

Physical Count of Inventory

An actual count of all merchandise or stock on hand, typically conducted at the end of an accounting period to verify inventory records.

Periodic Inventory System

An inventory system where counts are carried out at specific intervals to determine the level of inventory at a particular time.

Most Recent Costs

The latest costs incurred in acquiring or producing goods and services, often used in inventory valuation and costing methods.

Cost of Merchandise Sold

The direct costs tied to the production of goods sold by a company, including the cost of the materials and labor.