(Ignore Income Taxes in This Problem

question 153

Multiple Choice

(Ignore income taxes in this problem.) The management of Solar Corporation is considering the following three investment projects:
Rank the projects according to the profitability index,from most profitable to least profitable.

• A) M, N, L
• B) L, N, M
• C) N, L, M
• D) N, M, L

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Definitions:

Break-Even Point

The point at which total revenues equal total costs, and the business makes neither profit nor loss.

Fixed Expenses

A repackaged definition of fixed costs emphasizing their nature as constant across different levels of output or sales.

Selling Price

The amount of money charged to the buyer for a product or service.

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenue, indicating the company's bottom line.