- Which Statement Is False Select One A Applying The Profitability Index As An Investment Decision Tool Will Never Lead 1 (143.08 KiB) Viewed 55 times
Which
statement is false? Select one: A. Applying the profitability index as an investment decision tool will never lead to situations in which available resources remain unutilized. B. The profitability index is defined as value created divided by resources consumed. C. The profitability index (PI) serves to identify the optimal combination of projects to undertake whenever projects face resource constraints. D. None of the other answers is false. The HAT GmbH is planning to invest in new facilities for the production of headwear. The choices presented to the board will result in the following cashflows: The Cost of capital is 10%. Period 0 1 2 3 -50,000 € 30,000 € 15,000 € 17,000 € Project A Project B -100,000 € 60,000 € 58,000 € -100,000 € 30,000 € 81,000 € Project C Project D -100,000 € 820,000 € -778,000 € What are the net present values (NPV) of project alternative A and alternative B? Select one A. The NPV of alternative A equals 2,441.77 EUR, the NPV of alternative B is 2,441.77 EUR. B. The NPV of alternative A equals 2,441.77 EUR, the NPV of alternative B is 2,479.34 EUR. C. None of the answers is correct. D. The NPV of alternative A equals 2,479.34 EUR, the NPV of alternative B is 2,479.34 EUR.