Juan Is Considering Two Independent Projects

Multiple Choice

Juan is considering two independent projects.Project A costs $74,600 and has projected cash flows of $18,700,$46,300,and $12,200 for Years 1 to 3,respectively.Project B costs $70,000 and has cash flows of $10,600,$15,800,and $67,900 for Years 1 to 3,respectively.Juan assigns a discount rate of 10 percent to Project A and 12 percent to Project B.Which project or projects,if either,should he accept based on the profitability index rule?

A) Accept both projects.
B) Accept Project A and reject Project B.
C) Accept either A or B,but not both.
D) Reject both projects.
E) Accept Project B and reject Project A.