According to the Profitability Index Criterion, a Project Is Acceptable

question 71

Multiple Choice

According to the profitability index criterion, a project is acceptable if its profitability index is greater than ____.

• A) 1 plus the cost of capital
• B) 0
• C) or equal to 1
• D) 1.1

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Definitions:

Income Tax Allocation

The process of assigning the income tax expense or benefit to various accounting periods or components.

ASPE

Accounting Standards for Private Enterprises; a set of accounting policies and principles developed for use by private companies in Canada.

Jointly Controlled Enterprises

A business arrangement between two or more parties who share control over the business operations and decision-making process.

Proportionate Consolidation

An accounting method where an investor entity combines its share of each of the assets, liabilities, income, and expenses of a jointly controlled entity with similar items, line by line, in its financial statements.