Which of the Following Statements Is False

question 82

Multiple Choice

Which of the following statements is false?

• A) The profitability index measures the value created in terms of NPV per unit of resource consumed.
• B) The profitability index is the ratio of value created to resources consumed.
• C) The profitability index can can be easily adapted for determining the correct investment decisions when multiple resource constraints exist.
• D) The profitability index measures the "bang for your buck."

---

Definitions:

Utility Function

A mathematical model in economics that represents how different quantities of goods or services can provide satisfaction to consumers.

Income

The reward garnered over time, generally in a consistent pattern, from occupational or investment sources.

Expected Utility Function

A concept in economics that predicts the utility or satisfaction a rational individual expects to receive from different outcomes, used in decision making under uncertainty.

Sure Payment

A guaranteed payment, often referring to financial transactions where the payer is obligated to pay a certain amount.