Use of a Profitability Index to Evaluate Mutually Exclusive Projects

question 37

Multiple Choice

Use of a profitability index to evaluate mutually exclusive projects in the absence of capital rationing:

• A) will provide the same rankings as an NPV criterion.
• B) will maximize NPV, but not IRR.
• C) can result in misguided selections.
• D) is technically impossible.

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Definitions:

Metabolism

The set of life-sustaining chemical reactions in organisms for converting food into energy.

Aneuploidies

Chromosomal abnormalities where the number of chromosomes in a cell is not an exact multiple of the haploid set, leading to genetic disorders or variations.

Chromosome

A structure of nucleic acids and protein found in the nucleus of most living cells, carrying genetic information in the form of genes.

Maternal PKU

A concern in pregnancies of women with phenylketonuria (PKU), where elevated levels of phenylalanine can lead to developmental issues in the fetus.