An Investment Is Acceptable If the Profitability Index (PI) of the Investment

question 374

Multiple Choice

An investment is acceptable if the profitability index (PI) of the investment is:

• A) Greater than one.
• B) Less than one.
• C) Greater than the internal rate of return (IRR).
• D) Less than the net present value (NPV).
• E) Greater than a pre-specified rate of return.

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Definitions:

Monopoly

An economic condition where a single firm dominates the market for a product or service, often leading to reduced competition.

Oligopoly

An oligopoly is a market structure characterized by a small number of large firms that dominate the market, leading to higher prices and restricted output compared to a competitive market.

Differentiated Products

Products that are distinct from one another on the basis of quality, design, features, branding, or some other attribute.

Standardized Products

Goods that are uniform in quality and specifications across producers and can be easily substituted for one another.