The Profitability Index (PI) Rule Can Be Best Stated As

question 99

Multiple Choice

The profitability index (PI) rule can be best stated as:

• A) An investment is acceptable if its PI is greater than one.
• B) An investment is acceptable if its PI is less than one.
• C) An investment is acceptable if its PI is greater than the internal rate of return (IRR).
• D) An investment is acceptable if its PI is less than the net present value (NPV).
• E) An investment is acceptable if its PI is less than its payback.

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Definitions:

Utility Function

A mathematical representation in economics that quantifies an individual's preference for certain goods or outcomes over others.

Nuts

Edible seeds typically encased in a hard shell, commonly consumed as snacks or used in various recipes.

Berries

Small, pulpy, and often edible fruits that are typically juicy, rounded, brightly colored, and have seeds.

Utility Function

A mathematical expression that represents a consumer's preference ranking over a set of goods and services.