Which of the Statements Below Is FALSE

question 5

Multiple Choice

Which of the statements below is FALSE?

• A)The profitability index (PI)decision criterion states: if PI > 1.0,accept the project.
• B)The profitability index (PI)decision criterion states: if PI < 1.0,reject the project.
• C)The profitability index (PI)method multiplies the Present Value of Benefits by Present Value of Costs.
• D)If the PI is greater than one,the benefits exceed the costs.

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Definitions:

Limited Partnership

A business structure in which one or more of the owners may be granted limited liability as long as one partner is designated as a general partner with unlimited liability.

General Partnership

A business structure in which the business owners share the management and risk of the business.

Limited Liability

A legal structure that protects company owners' personal assets from business debts and liabilities.

Legal and Administrative Costs

Expenses incurred by a business for legal services and administrative operations.