16.Profitability Index Questions

Angry Little Black is trying to choose between the following two design projects that are intertwined.

a. If the required rate of return is 10% and the company applies the profitability index rule as a decision rule, which project should it adopt?

b. If the company applies the net present value rule as a decision rule, which project should it adopt?

C. Explain why the answers to question a. and question b. are different.

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