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Finance help - Accepting projects when independent and mutually exclusive

 
 
taehyun
 
Reply Fri 10 Apr, 2020 08:43 pm
Could somebody please help me answer these questions?

So, there are three projects as follows:
Liquidate: PI of 1.38 and NPV of 38,160.96
Recondition: PI of 0.81 and NPV of -97435.69
Replace: PI of 1.14 and NPV of 141,612.56.

The first question is asking which project should be accepted if the projects are INDEPENDENT, according to the PI only.
The second question is asking which project should be accepted if the projects are MUTUALLY EXCLUSIVE, according to the PI only.

The first question is asking which project should be accepted if the projects are INDEPENDENT, according to the NPV only.
The second question is asking which project should be accepted if the projects are MUTUALLY EXCLUSIVE, according to the NPV only.

It would also be greatly appreciated if somebody could also explain why each question has been answered the way they have been, and why answers have changed (if so) when considering NPV instead of PI. Thanks Smile
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