Which of the Following Is FALSE About the Profitability Index

question 58

Multiple Choice

Which of the following is FALSE about the profitability index?

• A)It is an absolute measure of wealth.
• B)It is often used when firms are capital constrained.
• C)It produces the same accept/reject decisions as does the NPV.
• D)It works even when future cash flows change signs.

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Definitions:

Personal Attributions

People’s explanations for why events or actions occur that refer to people’s internal characteristics, such as abilities, traits, moods, or efforts.

Trustworthiness

The quality of being reliable, honest, and deserving of trust.

Interest

A feeling of curiosity or concern about something, leading to a desire to learn more or engage with it.

Cognitive Dissonance

An uncomfortable mental state due to a contradiction between two attitudes or between an attitude and a behavior.