Consider the following projects: a. Calculate the profitability index for A and B assuming a 22% opportunity

Question:

Consider the following projects:

a. Calculate the profitability index for A and B assuming a 22% opportunity cost of capital.
b. According to the profitability index rule, which project(s) should you accept?

Opportunity Cost
Opportunity cost is the profit lost when one alternative is selected over another. The Opportunity Cost refers to the expected returns from the second best alternative use of resources that are foregone due to the scarcity of resources such as land,...