Using the Profitability Index, Which of the Following Mutually Exclusive

question 32

Multiple Choice

Using the profitability index, which of the following mutually exclusive projects should be accepted?
Project A: NPV = $6,000;NINV = $50,000
Project B: NPV = $10,000;NINV = $120,000
Project C: NPV = $8,000;NINV = $80,000

• A)A
• B)B
• C)C
• D)all projects should be accepted

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Definitions:

Pure Monopoly

A market structure where a single company is the sole producer for a particular good or service, facing no competition.

Barriers to Entry

Factors that make it difficult for new firms to enter a market, such as high startup costs, regulatory requirements, and established competitors.

Market Power

The ability of a firm to influence or control the price and quantity of goods or services in a market.

Marginal Revenue

The additional income obtained from selling one more unit of a product or service.