Snaptile Company Evaluates Future Projects by Using the Profitability Index

question 33

Multiple Choice

Snaptile Company evaluates future projects by using the profitability index. The company is currently reviewing three projects similar in nature and must choose one of the following: $\begin{array} { l l l r } \text { Project } & \text { Initial Investment } && \begin{array} { l } \text { Present Value of Cash } \\\text { Inflows }\end{array} \\1 & \$ 400,000 && \$ 300,000 \\2 & 200,000 & & 320,000 \\3 & 350,000 & & 430,000\end{array}$ Which project should Snaptile select if the decision is based entirely on the profitability index?

• A)Project 1 with a profitability index of 0.75.
• B)Project 1 with a profitability index of 1.33.
• C)Project 2 with a profitability index of 1.60.
• D)Project 2 with a profitability index of 0.67.
• E)Project 3 with a profitability index of 0.81.

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Definitions:

Diagnostic Evaluation

The comprehensive process of assessing an individual's symptoms and conditions to arrive at a diagnosis based on standardized criteria.

Summative Evaluation

Assessment conducted at the end of an intervention or program to determine its effectiveness or outcomes.

Empirical Evaluation

The process of using observation or experience-based data to assess the validity, effectiveness, or value of a concept, technique, or process.

Single-Subject Designs

Research designs focusing on the effect of an intervention on a single participant or subject, allowing for detailed observation of changes over time.