Reference no: EM13956167
Project A has an NPV of $20,000 and a PI of 1.2. Project B has an NPV of $10,000 and a PI of 1.3. Both projects have equal lives. Which project should be preferred if we are NOT concerned with capital rationing (that is, we are NOT concerned with being short of funds)?
We should compute the EAA before we make any decision.
We should prefer Project A since it has a higher NPV.
We should prefer Project B since it has a higher PI.
We should prefer Project B if it has a higher IRR.
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