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1 FINANCE MCQS

The Profitability Index (PI) in capital budgeting is used to ____________?

  • Negative projects
  • Relative projects
  • Evaluate projects
  • Earned projects
Correct Answer: D. Earned projects

Detailed Explanation

The Profitability Index (PI) is a capital budgeting technique used to evaluate and compare investment projects. It measures the present value of future cash inflows relative to the initial investment. A PI greater than 1 indicates that the project is profitable.

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