The Profitability Index Is the Least Preferable Method to Use

question 83

True/False

The profitability index is the least preferable method to use to evaluate capital budgeting projects because it does not take the time value of money into account.

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Definitions:

Question Mark

In business, a term used in the Boston Consulting Group (BCG) matrix referring to products or business units with high growth potential but currently hold a small market share.

Low Market Share

The condition of a company or brand having a small percentage of total sales in its industry, often leading to less influence and profitability.

High-Growth Market

A market characterized by significantly higher than average growth rates, attracting numerous competitors and investment.

Question Marks

Business units or products with low market share in high-growth markets, requiring decisions about investment to improve position or divestiture.