An Investment Is Acceptable If the Profitability Index (PI)of the Investment

question 29

Multiple Choice

An investment is acceptable if the profitability index (PI) of the investment is

• A)greater than one.
• B)less than one.
• C)greater than the internal rate of return (IRR).
• D)less than the net present value (NPV).
• E)greater than a prespecified rate of return.

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Definitions:

Lemons

A bright yellow, acidic fruit commonly used for its juice, zest, or as a garnish in cooking and baking.

Supply

The total amount of a good or service available for purchase at all possible prices in a given market, at a given time.

Price

The price in terms of money that is predicted, necessary, or paid for an object.

Equilibrium Price

The price at which the quantity of goods suppliers are willing to produce equals the quantity of goods consumers are willing to buy.