Which of the Statements Below Is TRUE

question 86

Multiple Choice

Which of the statements below is TRUE?

• A)According to the profitability index (PI)decision criterion when the PI is greater than 1,the costs exceed the benefits.
• B)If we realize that NPV is the present value of the benefits minus the present value of the costs,then we simply need to subtract the costs from the NPV to get the present value of the benefits.
• C)There are two acceptable projects,but we can only take one due to a shortage of funds.The PI for these two projects are: Project A: 2.25; Project B: 1.89.We would take Project B.
• D)A PI of 1.50 can be interpreted as meaning that for every $1.00 invested today the firm gets back $1.50 in current dollars.

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Definitions:

Exchange Theory

A theoretical framework positing that social behavior is the result of an exchange process aiming to maximize benefits and minimize costs.

Sales Interaction

The process and dynamics of communication between a salesperson and a prospective or current customer, aimed at promoting or selling a product or service.

Purchase Cycle

The sequence of stages that customers go through from recognizing a need, considering a purchase, making the purchase, and post-purchase behavior.

Value Added

The enhancement a company gives its product or service before offering the product to customers, increasing its value.