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You are informed that the effective annual required rate of return is 10%. Cash flows for the projects are indicated in the table below (in

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You are informed that the effective annual required rate of return is 10%. Cash flows for the projects are indicated in the table below (in thousands of dollars): Consider Project A and Project B mutually exclusive projects. Calculate the PI for the incremental Project A over B. Using the PI decision criterion, what would you recommend? A. Accept Project A over Project B since the PI of the incremental project AB is 1.12 which is greater than 1 . B. We cannot compute the incremental project since A is an investment project and B is a financed project. C. The PI of Project A is 0.84 and the PI of Project B is 1.1 , so we should pick Project B over Project A. D. The incremental cash flows of the project (A over B) are $13,800, $1,200,$11,800 and $6,200 for which the PI is 1.12 therefore we should accept both Project A and Project B. E. None of the above are true

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