The Major Advantage Provided by the Profitability Index Is It

question 55

Multiple Choice

The major advantage provided by the profitability index is it:

• A) eliminates the need to estimate the firm's cost of capital.
• B) reduces the forecast error of cash flow estimates.
• C) provides a better measure of the effects of a project on shareholder wealth than NPV.
• D) is useful as an aid in raking projects from best to worst.
• E) is easier to calculate than NPV.

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Definitions:

Antalgic

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Bed Rest

A medical treatment in which a patient is advised to stay in bed for most of the time to aid the process of recovery.

Constipation

A common condition characterized by infrequent bowel movements and difficulty in passing stools.