Use the Following Mutually Exclusive Investment Cash Flows for the Question(s)

question 91

Multiple Choice

Use the following mutually exclusive investment cash flows for the question(s) below: If the discount rate is 14%, using profitability index which of the following is true?

• A) The PI of project A is less than 1.0
• B) The PI of project B is less than 1.0
• C) Based on the PI, project A is preferable
• D) Both projects would be rejected based on the PI criterion
• E) Based on the two PI's, it is obvious the IRR for both projects is less than 14%

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Definitions:

Internal Control Activities

Procedures and policies designed to safeguard a company’s assets, enhance the reliability of financial reporting, and ensure compliance with laws and regulations.

Globally

Refers to an action or concept considered or applied worldwide.

Petty Cash

A small amount of cash on hand used for covering minor and incidental expenses in an organization.

Payment

The act of transferring money or its equivalent in exchange for goods or services.