Which of the Following Is True Regarding the Profitability Index

question 61

Multiple Choice

Which of the following is true regarding the profitability index?

• A) It does not use the net present value (NPV) to assess benefits.
• B) It is very simple to compute.
• C) Attention must be taken when using it to make sure that all of the constrained resource is utilized.
• D) It is unreliable when used for choosing between different projects.
• E) It ignores cash flows after the cutoff

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