A Firm Plans to Use the Profitability Index to Select

question 3

Multiple Choice

A firm plans to use the profitability index to select between two mutually exclusive investments.If no capital rationing has been imposed,which project should be selected?

• A) Select the project with the higher profitability index
• B) Select the project with the lower profitability index
• C) Without capital rationing, both projects can be selected
• D) Without capital rationing, the NPV method must be used instead

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Definitions:

Consumer Transactions

The purchase and sale of goods or services between a buyer, typically an individual or household, and a seller for personal use.

Consideration

In contract law, it refers to something of value exchanged by the parties involved that induces them to enter into the agreement.

Personal Defense

Strategies, methods, or actions employed by an individual to protect themselves from harm.

HDC

Stands for Holder in Due Course, a term in commercial law referring to a party who acquires a negotiable instrument in good faith and for value, thus having certain protections.