NC Products Inc

question 51

Multiple Choice

NC Products Inc. is considering investing in one of two projects. Both projects have a net present value of $25,000; however, Project #1 requires an initial investment of $300,000 while Project #2 requires an initial investment of $700,000. Based on this information, which of the following statements is true?

• A) Project #2 will have a higher profitability index.
• B) Project #1 will have a higher profitability index.
• C) Both projects will have the same profitability index.
• D) There is not enough information to determine the profitability index of either project.

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Definitions:

Margin of Error

A statistic expressing the amount of random sampling error in a survey's results, representing how far the true value could deviate from the observed value.

Minimum Sample Size

The smallest number of observations or data points that is considered sufficient for a statistically valid result.

Population Proportion

The fraction or percentage of a population that exhibits a particular attribute or characteristic.

Confidence Interval

A stretch of numerical indicators, obtained from sample statistics, envisaged to hold the secret value of a population characteristic.