Use of a Profitability Index to Select Projects in the Absence

question 83

Multiple Choice

Use of a profitability index to select 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:

Comprehension

The ability to understand and grasp the meaning of information or an idea.

Aphasia

A language disorder that results from damage to portions of the brain that are responsible for language, impairing the ability to communicate.

Mentally Retarded

An outdated and offensive term for what is now more accurately described as intellectual disability, characterized by significant limitations in intellectual functioning and adaptive behavior.

Produce Language

The ability to use vocabulary and grammar to create meaningful sentences and express thoughts.