The Profitability Index

Multiple Choice

The profitability index:

A) rule often results in decisions that conflict with the decisions based on the net present value rule.
B) is useful as a decision tool when investment funds are limited and all available funds are allocated.
C) method is most commonly used when deciding between mutually exclusive projects of varying size.
D) rule states that the project with the lower index value should be accepted.
E) produces results which typically are difficult to comprehend.