If there is no capital rationing, the firm would accept both projects since the NPV of each project, at 10 percent, is positive. Under capital rationing, Project 1 would be preferred over project 2, since it has the higher ratio of NPV to investment (0.28) than Project 2 (0.24). In a sense, the underlying logic is one of getting the most bang for the buck. Remember, though, that the use of PI for ranking investment projects is appropriate only under conditions of capital rationing.