QUESTION IMAGE
Question
- project a: 0.34
- project b: 112
- project c: 1.26
- project d: 0.93
in theory, which two projects should the company pursue?
projects a and c
projects b and c
projects b and d
projects a and d
Step1: Understand Project Selection Criterion
In capital budgeting (e.g., NPV or profitability index), projects with values > 1 are typically pursued (assuming these numbers are profitability indices or NPVs where >1 is favorable).
Step2: Evaluate Each Project
- Project A: \( 0.34 < 1 \) → Not favorable.
- Project B: \( 112 > 1 \) → Favorable.
- Project C: \( 1.26 > 1 \) → Favorable.
- Project D: \( 0.93 < 1 \) → Not favorable.
Step3: Identify Favorable Pairs
From the options, only Projects B and C have both values > 1.
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B. Projects B and C