Question: !!! Two-Part Question !!! 1) The profitability index for Project A is .98, then you know for certain that...: A) For every dollar invested in

!!! Two-Part Question !!!

1) The profitability index for Project A is .98, then you know for certain that...:

A) For every dollar invested in the project, the firm will realize a profit of 98 cents.

B) The IRR of the project must be higher than the discount rate.

C) The NPV of the project is negative.

D) The discounted payback period must be less than one year.

2) You are deciding on two competing projects. Project A has a Profitability Index of 1.22 and Project B has a Profitability index of 1.27. Based on this information, you know for certain that...:

a) The NPV for both projects is positive.

b) The IRR for both projects must be higher than the discount rate.

c) Both projects are profitable.

d) All options are correct.

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