The Profitability Index Is Most Closely Related to Which One

question 73

Multiple Choice

The profitability index is most closely related to which one of the following?

• A)payback
• B)discounted payback
• C)average accounting return
• D)net present value
• E)modified internal rate of return

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Definitions:

Substitution Effect

A shift in consumer preferences resulting from alterations in the comparative costs of different products, causing buyers to switch from one product to another.

Demand Curves

A graph showing the relationship between the price of a good and the quantity of the good that consumers are willing to buy at that price.

Marginal Utility Data

Information that measures the additional satisfaction or benefit that is gained from consuming one more unit of a good or service.

Utility Maximization

The process of choosing the most satisfying option from a set of alternatives based on preferences.