A Firm Uses the Profitability Index to Select Between Two

question 79

Multiple Choice

A firm uses the profitability index to select between two mutually exclusive investments.If no capital rationing has been imposed, which project should be selected?

• A)select the project with the higher profitability index.
• B)select the project with the lower profitability index.
• C)without capital rationing, both projects can be selected.
• D)without capital rationing, select by NPV method.

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Definitions:

Environmental Costs

The negative impacts on the environment due to industrial processes, consumption patterns, or other human activities, often quantified in economic terms.

Virgin Materials

Raw materials that have never been processed or used before, often extracted directly from the Earth.

Hazardous Wastes

Hazardous wastes are materials that are dangerous or potentially harmful to people's health or the environment, often requiring special handling and disposal procedures.

Less-Hazardous Substances

Chemicals or materials that pose a lower risk to human health and the environment compared to their more dangerous counterparts.