Use of a Profitability Index to Select Projects in the Absence

question 83

Multiple Choice

Use of a profitability index to select projects in the absence of capital rationing:

• A) will provide the same rankings as an NPV criterion.
• B) will maximize NPV, but not IRR.
• C) can result in misguided selections.
• D)is technically impossible.

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Definitions:

Primary Piston

The main piston in a hydraulic or pneumatic system that is first to receive pressure from the fluid or air, translating that pressure into mechanical force.

Relay Piston

A component within a hydraulic or pneumatic system that transmits force from the relay valve to perform work, such as moving other parts.

Dual Circuit Foot Valve

A braking component in heavy vehicles, providing two separate pathways for brake fluid to ensure redundancy for safety.

Primary Section

The first or most important part of a system or structure, often serving as the foundational element.