ABC Company has the following mutually exclusive projects. Year Project A Project B 0 -$19,520 -$16,800 1 11,500 9,500 2 8,750 7,100 3 2,500 3,500 If the company uses the Profitability Index to rank these two projects, which project should be chosen if the appropriate discount rate is 15 percent?
ABC Company has the following mutually exclusive projects. Year Project A Project B 0 -$19,520 -$16,800 1 11,500 9,500 2 8,750 7,100 3 2,500 3,500 If the company uses the Profitability Index to rank these two projects, which project should be chosen if the appropriate discount rate is 15 percent?
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 15P
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Question
ABC Company has the following mutually exclusive projects.
Year |
Project A |
Project B |
0 |
-$19,520 |
-$16,800 |
1 |
11,500 |
9,500 |
2 |
8,750 |
7,100 |
3 |
2,500 |
3,500 |
If the company uses the Profitability Index to rank these two projects, which project should be chosen if the appropriate discount rate is 15 percent?
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