Perkins Corporation Is Considering Several Investment Proposals, as Shown Below

question 7

Multiple Choice

Perkins Corporation is considering several investment proposals, as shown below: If the profitability index is used, the ranking of the projects from most to least profitable would be:

• A) D, B, C, A
• B) B, D, C, A
• C) B, D, A, C
• D) A, C, B, D

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Definitions:

Consolidation Method

An accounting technique used by firms to combine the financial statements of subsidiaries with those of the parent company to present as one entity.

Equity Securities

Financial instruments like stocks that represent ownership interest in a company or rights to acquire such an interest.

Insignificant Influence

A situation where an investor does not have enough impact on a business to affect its decisions or policies.

Dividend Revenue

Income received from owning shares in a company which distributes a portion of its earnings to its shareholders.