Moe’s Tablet Warehouse is evaluating two potential projects. Project A has an initial investment of $800...

Moe’s Tablet Warehouse is evaluating two potential projects. Project A has an initial investment of $800 and yearly cash flows of $500, $600, and $700. Project B has an initial investment of $500 and yearly cash flows of $300, $400, and $500. Moe’s has a rate of return of 8%. Which project has the greater profitability index and what is its PI?

Group of answer choices Project A. Its PI is 0.916.

Project B. Its PI is 0.823.

Project A. Its PI is 1.062.

Both projects have the same PI of 1.000.

Project B. Its PI is 1.035.

Expert Solution

jeff jeffy answered 2 years ago

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