Reject these projects based on the profitability index

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Reference no: EM131268086

You are considering two mutually exclusive projects. Project A has cash flows of -$74,900, $18,400, $26,300, and $57,100 for years 0 to 3, respectively. Project B has cash flows of -$79,000, $18,400, $22,700, and $51,500 for years 0 to 3, respectively. Both projects have a required return of 12.75 percent. Should you accept or reject these projects based on the profitability index?

Accept Project A and reject Project B.

Reject Project A and accept Project B.

Accept both projects.

Reject both projects. .

You should not use PI; use a different method of analysis.

Reference no: EM131268086

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