When Using a Profitability Index to Select Projects, a Value

question 30

True/False

When using a profitability index to select projects, a value of .63 is preferred over a value of 0.21.

---

Definitions:

Net Loss

The amount by which expenses exceed revenues.

Net Income

The amount of money remaining after all operating expenses, taxes, and dividends have been subtracted from total revenue.

Fair Value

An estimate of the price at which an asset or liability could be exchanged between knowledgeable, willing parties in an arm's length transaction.