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

Explanation:

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.

Answer:

B. Projects B and C