Corp Suite is considering two expansion options, but does not have enough capital to undertake both. Project W requires an investment of $100,000 and has an NPV of $10,000. Project D requires an investment of $80,000 and has an NPV of $8200. If Corp Suite uses the profitability index to decide, it would A. choose D because it has a higher profitability index. B. choose W because it has a higher profitability index. C. choose D because it has a lower profitability index. D. choose W because it has a lower profitability index.
Corp Suite is considering two expansion options, but does not have enough capital to undertake both. Project W requires an investment of $100,000 and has an NPV of $10,000. Project D requires an investment of $80,000 and has an NPV of $8200. If Corp Suite uses the profitability index to decide, it would A. choose D because it has a higher profitability index. B. choose W because it has a higher profitability index. C. choose D because it has a lower profitability index. D. choose W because it has a lower profitability index.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Corp Suite is considering two expansion options, but does not have enough capital to undertake both. Project W requires an investment of $100,000 and has an
A. choose D because it has a higher profitability index.
B. choose W because it has a higher profitability index.
C. choose D because it has a lower profitability index.
D. choose W because it has a lower profitability index.
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