Which of the Following Are Correct Capital Budgeting Decision Rules

question 9

Multiple Choice

Which of the following are correct capital budgeting decision rules when using the profitability index (PI) ?

• A) PI < 1, invest; PI_a > PI_b, pick a, etc.
• B) PI = 1, invest; PI_a > PI_b, pick a, etc.
• C) PI < 1, don't invest; PI_b > PI_a, pick a, etc.
• D) PI > 1, invest; PI_a > PI_b, pick a, etc.

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Definitions:

Diffusion of Innovation

Diffusion of innovation is the process by which a new idea, product, or behavior is accepted and adopted by the market or a community over time.

Diffusion of Innovation

A theory that describes how, why, and at what rate new ideas and technology spread through cultures and societies, from early adopters to more widespread acceptance.

Diffusion of Innovation

The process by which a new idea, product, or behavior spreads through a population, influencing the adoption rate and market saturation.

Early Adopters

A group within a consumer base that is among the first to acquire and use a new product or technology, often influencing others.