If a company's required rate of return is 8%, and in using the profitability index method, a project's index is greater than 1, this indicates that the project's rate of return is less than 8%. greater than 8%. unacceptable for investment purposes. equal to 8%.

If a company's required rate of return is 8%, and in using the profitability index method, a project's index is greater than 1, this indicates that the project's rate of return is less than 8%. greater than 8%. unacceptable for investment purposes. equal to 8%.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 4TP: Midas Corp. evaluated a potential investment and determined the NPV to be zero. Midas Corp.s...

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Concept explainers

Risk Management Techniques

Risk management is the procedure of recognizing, analyzing, monitoring, and preventing the risks and threatening factors of investments and business. Risks can arise from various factors including internal controls, market changes, natural disasters, and failure in productions. Risk management techniques enable entities to control and minimize the risks as well as the threatening factors of the business and it also helps to improve the business.

Question

If a company's required rate of return is 8%, and in using the profitability index method, a project's index is greater than 1, this
indicates that the project's rate of return is
less than 8%.
greater than 8%.
O unacceptable for investment purposes.
equal to 8%.

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