Which of the statements below is FALSE? A)The profitability index (PI)decision criterion states: if PI 1.0,accept the project. B)The profitability index (PI)decision criterion states: if PI

Question

Which of the statements below is FALSE?
A)The profitability index (PI)decision criterion states: if PI > 1.0,accept the project.
B)The profitability index (PI)decision criterion states: if PI < 1.0,reject the project.
C)The profitability index (PI)method multiplies the Present Value of Benefits by Present Value of Costs.
D)If the PI is greater than one,the benefits exceed the costs.

Quizplus · Accepted Answer

The Profitability Index (PI) is calculated by dividing the Present Value of Benefits by the Present Value of Costs, not by multiplying them.

Which of the Statements Below Is FALSE