Cresol Corporation has a large number of potential investment opportunities that are acceptable. However, Cresol does not have enough investment funds to invest in all of them. Which calculation would be the best one for Cresol to use to determine which projects to choose?
A) payback period
B) simple rate of return
C) net present value
D) project profitability index

Question

Quizplus · Accepted Answer

The project profitability index helps in ranking projects when capital is limited, as it measures the value created per unit of investment, allowing Cresol to prioritize projects that offer the highest return relative to their cost.

Cresol Corporation Has a Large Number of Potential Investment Opportunities