The Profitability Index

question 104

Multiple Choice

The profitability index

• A) does not take into account the discounted cash flows.
• B) is calculated by dividing total cash flows by the initial investment.
• C) allows comparison of the relative desirability of projects that require differing initial investments.
• D) will never be greater than 1.

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Definitions:

Rare events

Occurrences that happen infrequently or have a very low probability of taking place, often of significant interest in statistical analysis and study.

Content analysis

A research method used to systematically analyze the content of communication media through coding and identifying patterns or themes.

Systematic analysis

An organized method of examining and evaluating data or processes by breaking them into smaller parts to better understand the whole.

Existing documents

Previously produced materials (such as records, letters, or reports) used as data sources in qualitative research.