Based on the profitability index of _____ for this project,you should _____ the project.
A).86; reject
B)1.00; accept
C)1.14; accept
D)1.07; accept
E)1.04; accept

Question

Quizplus · Accepted Answer

A profitability index greater than 1 indicates that the project is acceptable. Choice A, with a PI of 0.86, is lower than 1 and should be rejected. Choice B has a PI of 1.00, which is exactly break-even and does not provide a significant return on investment. Choices C, D, and E all have PIs greater than 1, indicating that the project is profitable. However, choice C has the highest PI, indicating the highest return on investment, and is therefore the best choice.

Based on the Profitability Index of _____ for This Project,you