Analysis Using the Profitability Index

Multiple Choice

Analysis using the profitability index:

A) frequently conflicts with the accept and reject decisions generated by the application of
The net present value rule.
B) is useful as a decision tool when investment funds are limited.
C) cannot be used to aid capital rationing.
D) utilizes the same basic variables as those used in the average accounting return.
E) produces results which typically are difficult to comprehend or apply.