Concept explainers
a)
To select: A project by applying the rule of profitability index.
Introduction:
The Profitability index is a payoff ratio to the investment of the planned project. It is utilized for ranking the projects. The
b)
To select: A project by applying the rule of NPV (Net present value):
Introduction:
The Profitability index is a payoff ratio to the investment of the planned project. It is utilized for ranking the projects. The net present value is one of the capital budgeting techniques, which is used to identify the profitability in the proposed investment.
c)
To discuss: The reason for different answers in Part A and Part B.
Introduction:
The Profitability index is a payoff ratio to the investment of the planned project. It is utilized for ranking the projects. The net present value is one of the capital budgeting techniques, which is used to identify the profitability in the proposed investment.
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Corporate Finance Southern Connecticut State University
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