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If we have two independent projects: Project Astudent has a positive NPV of $25,000 and a...

If we have two independent projects: Project Astudent has a positive NPV of $25,000 and a Profitability Index (PI) of 1.1, while Project Gummie has an NPV of $12,000 and a Profitability Index (PI) of 1.6 then you should

A) Accept only project Astudent because

B) Accept only project Gummi because

C) Accept both projects because

D) Reject both projects becasue

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Answer #1

Answer: Option C is correct
Independent projects are the set of projects that are unrelated to each other. In case of independent projects both the projects can be selected.
As the NPV of both the projects are positive, both the projects can be selected. Positive NPV will increase the shareholders' value.

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