You need to borrow $2,000 quickly, and the local pawn shop will give it to you if you promise to repay them $200.92 monthly over the next year.
Suppose the pawn shop has more customers than funds. Which capital budgeting technique would
Allow it to rank potential customers in order to maximize current wealth?
A) AAR
B) Payback period
C) Proﬁtability index
D) NPV
E) Discounted payback

Question

Quizplus · Accepted Answer

The profitability index (PI) is a capital budgeting technique that helps rank projects or investments based on their profitability relative to their cost. It is useful for prioritizing projects when resources are limited, as it indicates which projects will provide the most value per unit of investment.

You Need to Borrow $2,000 Quickly, and the Local Pawn