Question
Project Q has an initial cost of $257,412 and projected cash flows of $123,300 in Year 1 and $180,300 in Year 2. Project R has
Project Q has an initial cost of $257,412 and projected cash flows of $123,300 in Year 1 and $180,300 in Year 2. Project R has an initial cost of $345,000 and projected cash flows of $184,500 in Year 1 and $230,600 in Year 2. The discount rate is 12.2 percent and the projects are independent. Which project(s), if either, should be accepted based on its profitability index value?
Multiple Choice
Reject both Project Q and R
Accept Project R and reject Project Q
Accept either Project R or Project Q, but not both
Accept Project Q and reject Project R
Accept both Project Q and R
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