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:

Implied Warranty Of Merchantability

A legal presumption that goods sold by a merchant are fit for the general purpose for which they are sold.

Express Warranty

A clearly stated promise or guarantee about the quality or condition of a product or service made by a seller to a buyer.

Implied Warranty Of Merchantability

A legal presumption that ensures a product sold by a merchant meets certain quality and performance standards.

Disclaimer

A statement that denies responsibility or affiliation, often used to limit legal liability or to distance oneself from certain information or actions.