Holding All Else Equal, the Profitability Index Will Fall Following

question 36

Multiple Choice

Holding all else equal, the profitability index will fall following an increase in the:

• A) cost of capital.
• B) benefit-cost ratio.
• C) IRR.
• D) NPV.

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Definitions:

Percentages

A portion or share of a whole, expressed as a fraction of 100.

Normal Curve

A symmetrical, bell-shaped curve that represents the distribution of a set of data, indicating that data near the mean are more frequent in occurrence than data far from the mean.

Probabilities

Measures expressing the likelihood of various outcomes of an event or experiment, ranging from impossible (0) to certain (1).

Standard Scores

A type of score that allows for comparisons across different tests or assessments by normalizing scores on a common scale.