Without Using Formulas, Provide a Definition of Profitability Index (PI)

question 358

Multiple Choice

Without using formulas, provide a definition of profitability index (PI) .

• A) A ranking method used to assess projects. PI greater than 1 signify positive NPV projects, while PI less than 1 signify negative NPV projects.
• B) A project analysis tool that determines the amount of time required for an investment to generate cash flows to recover its initial cost.
• C) A project analysis tool that measures the acceptability of a project by determining the length of time required for an investment's discounted cash flows to equal its initial cost.
• D) A project analysis tool that measures the acceptability of a project through the difference between a project's initial investment and whether the present value of its cash flow will
• Repay the investment.
• E) A project analysis tool that measures the acceptability of a project by determining the amount of profit that can be expected based on an investment made.

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Definitions:

Endoplasmic Reticulum

A membranous network within cells that is involved in protein and lipid synthesis, transport, and detoxification processes, existing in two forms: rough and smooth.

Calcium Ions

Positively charged calcium atoms (Ca2+) that play essential roles in biological processes like bone formation, muscle contraction, and blood clotting.

Signaling Pathway

Complex networks of molecules that transmit information from external stimuli to a cell's interior, triggering specific cellular responses.

Phosphodiesterase

An enzyme that plays a critical role in cellular signaling by breaking down phosphodiester bonds within cyclic nucleotides like cAMP and cGMP.