If a Company Has Computed the Profitability Index of an Investment

question 30

Multiple Choice

If a company has computed the profitability index of an investment project as 1.15, then

• A)the project's internal rate of return is less than the discount rate.
• B)the project's internal rate of return is greater than the discount rate.
• C)the project's internal rate of return is equal to the discount rate.
• D)the relationship of the rate of return and the discount rate is impossible to determine from the data given.

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Definitions:

Concrete Operations

A stage in Piaget's theory of cognitive development where children aged 7 to 11 start thinking logically about concrete events.

Logical Conclusions

The final step in a reasoning process, based on the logical combination of facts, observations, or premises.

Abstract Terms

Words or phrases that represent ideas or concepts that are not tangible or concrete.

Cephalocaudal

A principle of human growth and development where development proceeds from the head downwards through the body.