The project cash flows and NPVs for Projects A and B are provided in t
The project cash flows and NPVs for Projects A and B are provided in the table below. Which project has a higher profitability index?
Project A Project B
Year 0 -$1,900 -$2,000
Year 1 $2,500 $1,550
Year 2 $1,500 $1,900
NPV $1,408.12 $784.50
A) Project A
B) Project B
C) The two projects have the same Profitability Index
ANSWER
A
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