Cori?s Sausage Corporation is trying to choose between the following two mutually exclusive design projects:

a. If the required return is 10 percent and the company applies the profitability index decision rule, which project should the firm accept?

b. If the company applies the NPV decision rule, which project should it take?

c. Explain why your answers in (a) and (b) are different.

Transcribed Image Text:

Project I Project II Year -$45,000 -$19,800 23,200 11,700 2 23,200 11,700 3 23,200 11,700