A Firm Uses the Profitability Index to Select Between Two

question 89

Multiple Choice

A firm uses 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, select by NPV method.

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Definitions:

Wealth Distribution

The manner in which wealth is distributed among the individuals in a society.

Income Inequality

Income inequality describes the extent to which income is distributed unevenly among a population.

Unequally Distributed

Refers to an unequal allocation or distribution of resources, wealth, or opportunities among different individuals or groups.

Income Inequality

Inequitable apportionment of income among household or personal entities within an economic framework.