You Are Considering the Following Two Mutually Exclusive Projects

Multiple Choice

You are considering the following two mutually exclusive projects. Both projects will be depreciated using straight-line depreciation to a zero book value over the life of the project. Neither project has any salvage value. Required rate of return 10% 13%
Required payback period 2.0 years 2.0 years
Based upon the profitability index (PI) and the information provided in the problem,you should:

A) accept both project A and project B.
B) accept project A and reject project B.
C) accept project B and reject project A.
D) reject both project A and project B.
E) disregard the PI method in this case.