Jefferson International is trying to choose between the flowing two mutually exclusive design projects: Year Cash Flow (A) Cash Flow (B) 0 -$79,000 -$12,500 1 18,500 5,800 2 39,600 21,800 3 48,700 25,600 The required rate of return is 9 percent. Project A has a profitability index of 1.3 and project B has a profitability index of 1.24. Which project should the firm accept and why? Choose the answer with the "best" reasoning. Group of answer choices Project A because it has a higher profitability index Project B because it has a higher profitability index Project A because it has a higher NPV Project B because it has a higher NPV Project B because it has a higher profitability index and NPV
Question 25
Jefferson International is trying to choose between the flowing two mutually exclusive design projects:
|
Year |
Cash Flow (A) |
Cash Flow (B) |
|
0 |
-$79,000 |
-$12,500 |
|
1 |
18,500 |
5,800 |
|
2 |
39,600 |
21,800 |
|
3 |
48,700 |
25,600 |
The required
Group of answer choices
Project A because it has a higher profitability index
Project B because it has a higher profitability index
Project A because it has a higher
Project B because it has a higher NPV
Project B because it has a higher profitability index and NPV
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