In Preference Decisions, the Profitability Index and Internal Rate of Return

question 9

True/False

In preference decisions, the profitability index and internal rate of return methods may produce conflicting rankings of projects

---

Definitions:

Minimum Price

A minimum price is a legally imposed threshold set above the equilibrium price, below which a certain good or service cannot be sold, often to protect producers.

Profitable Output

The level of production at which a business or economic activity yields the maximum profit.

Firm

A business organization, such as a corporation, partnership, or sole proprietorship, that sells goods or services to consumers in exchange for money.

Total Profit

The overall financial gain made by a business after subtracting all costs from the total revenue generated from its operations.