One can use the profitability index most usefully for which situation?
A)When capital rationing exists
B)Evaluation of exceptionally long-term projects
C)Evaluation of nonnormal projects
D)When a project has unusually high cash flow uncertainty

Question

Quizplus · Accepted Answer

The profitability index is especially useful when dealing with capital rationing situations where companies have a limited amount of capital to invest in projects. The profitability index allows us to rank different projects according to their return on investment per dollar of investment, making it an important tool for optimizing capital allocation.

One Can Use the Profitability Index Most Usefully for Which