In Capital Budgeting, the Profitability Index (PI) Decision Model Is

question 51

Multiple Choice

In capital budgeting, the profitability index (PI) decision model is best used to

• A) Evaluate mutually exclusive investments of different sizes.
• B) Adjust for inflation in the net present value (NPV) calculation.
• C) Select projects when capital budgeting funds are limited.
• D) Adjust for risk in capital budgeting decisions.
• E) Adjust for the difference between the accounting rate of return (ARR) and the internal rate of return (IRR).

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