Activity 2: Concept Check (PI) Q4) Which of the following statements is FALSE? A The profitability index measures the value created in terms of NPV per unit of resource consumed. B Capital rationing is the process through which companies decide how to allocate their capital among different projects, given that their resources are not limitless. C The profitability index can be easily adapted for determining the correct investment decisions when multiple resource constraints exist. selected D If there is a fixed supply of resources available, so that you cannot undertake all possible opportunities, then simply picking the highest NPV opportunity might not lead to the best decision. SUBMIT

Which of the following statements is FALSE?Group of answer choicesProblems can arise using the IRR method when the mutually exclusive investments have differences in scale.Picking one project over another simply because it has a larger IRR can lead to mistakes.The profitability index measures the value created in terms of PV(Cash Flow) per unit of resource consumed.The profitability index alone can be easily adapted for determining the correct investment decisions when multiple resource constraints exist.

What type of ratios measure how effectively a firm is using its various resources to achieve profits?Multiple choice question.profitabilityliquidityleverageactivity

Activity 2: Concept Check (IRR and NPV) Q3) Which of the following statements is FALSE? A The IRR investment rule states you should turn down any investment opportunity where the IRR is less than the opportunity cost of capital. B In a standalone project (independent project), the decision made by applying NPV investment rule is usually consistent with that of IRR investment rule. C Since the IRR rule is based upon the rate at which the NPV equals zero, like the NPV decision rule, the IRR decision rule will always identify the correct investment decisions. D There are situations in which multiple IRRs exist. SUBMIT

Consider two mutually exclusive projects E and S. Both projects have the same profitability index of 1.2 (PIE = PIS = 1.2). The initial investment of Project E is I0,E = -$367,000, and the initial investment of Project S is I0,S = -$265,000. Which of the following statements is true?Question 7AnswerWe are unable to make an investment decision based on the information provided.cross outThe payback period of project E is 1.2 years.cross outThe NPV of project S is greater than the NPV of project E.cross outThe NPV of project E is greater than the NPV of project S.cross outThe NPVs of project E and S are equal.

Multiple Choice Question______ ratios measure how much operating income an organization is able to generate relative to assets, owners' equity, and sales.Multiple choice question.ProfitabilityAsset utilizationLiquidityDebt utilization