A capital project is to be funded by a single source of capital. Which of the following statements regarding the project's evaluation is true?

Select one:

a. The project should be evaluated using the cost of capital that reflects the risk of the project and the companys target capital structure.

b. Only the cost of that source of capital should be used to evaluate the project.

c. The project should be evaluated using the historical cost of capital of the firm.

d. The project should be evaluated using the cost of equity of the firm.

Project A and Project B are two independent projects. Project A has a PI of 0.6, and Project B has a PI of 0.95. What is your decision regarding the two projects?

Select one:

a. Both Project A and Project B should be rejected.

b. Both Project A and Project B should be accepted.

c. Project A should be accepted, and project B should be rejected.

d. Project A should be rejected, and project B should be accepted.