Project Q Has an Initial Cost of $211,415 and Projected

question 72

Multiple Choice

Project Q has an initial cost of $211,415 and projected cash flows of $121,300 in Year 1 and $176,300 in Year 2.Project R has an initial cost of $415,000 and projected cash flows of $187,500 in Year 1 and $236,600 in Year 2.The discount rate is 8.5 percent and the projects are independent.Which project(s) ,if either,should be accepted based on its profitability index value?

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

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Definitions:

IQ Scores

Numerical assessments derived from standardized tests designed to measure human intelligence.

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The diverse means through which individuals gain information and understanding, including experience, education, observation, and reasoning.

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