44) The profitability index is useful to: A) provide a resolution to the reinves

ID: 2753484 • Letter: 4

Question

44) The profitability index is useful to:

A) provide a resolution to the reinvestment rate problem

B) provide a way to compare investments of differing sizes

C) provide a way to compare investments of differing risk levels

D) provide a way to compare investments of differing lives

48) Firms use different discount rates to evaluate the NPV of capital investments when the investments have:

A) different initial costs B) different risk levels C) different useful lives D) the blessing of the firm's CEO

49) Among the advantages of the NPV techique to evaluate capital investments is:

A) it is easy to explain to those who are unsophisticated in financial theory

B) it automatically incorporates differing levels of investment risk

C) it provides an answer that is useful in comparing investments of differing initial costs

D) none of the above

50) Among the advantages of the payback period to evaluate capital investments is:

A) it is easy to explain to those who are unsophisticated in financial theory

B) it automatically incorporates differing levels of investment risk

C) it provides an answer that is useful in comparing investments of differing initial costs

D) none of the above

44) The profitability index is useful to: A) provide a resolution to the reinvestment rate problem

48) B) different risk levels

49) D) none of the above

50) C) it provides an answer that is useful in comparing investments of differing initial costs

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