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AHIP AHM-520 Exam - Topic 5 Question 76 Discussion

The Jade Health Plan used a profitability index (PI) to rank the following capital proposals:Proposal PIA 0.45B 1.05This information indicates that, of these two projects, Jade would most likely select:
C) Proposal B, and the PI indicates that the net present value (NPV) for this project is less than zero
A) Proposal A, and the PI indicates that the net present value (NPV) for this project is less than zero
B) Proposal A, and the PI indicates that the net present value (NPV) for this project is greater than zero
D) Proposal B, and the PI indicates that the net present value (NPV) for this project is greater than zero

AHIP AHM-520 Exam - Topic 5 Question 76 Discussion

Actual exam question for AHIP's AHM-520 exam
Question #: 76
Topic #: 5
[All AHM-520 Questions]

The Jade Health Plan used a profitability index (PI) to rank the following capital proposals:

Proposal PI

A 0.45

B 1.05

This information indicates that, of these two projects, Jade would most likely select:

Show Suggested Answer Hide Answer
Suggested Answer: C

by Bobbye at Oct 17, 2023, 07:18 AM

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Xochitl
7 months ago
So, does that mean A is a total no-go?
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Iluminada
7 months ago
Definitely B, higher PI means better profitability!
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Chery
7 months ago
Wait, how can A have a positive NPV if its PI is 0.45? That seems off.
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Herman
7 months ago
I agree, B is the way to go! A's PI is below 1.
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Janae
8 months ago
Proposal B has a PI of 1.05, so it’s definitely the better choice!
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Bulah
8 months ago
I’m not sure if the NPV for Proposal B is definitely greater than zero, but since its PI is above 1, it seems like the best choice overall.
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Sharmaine
8 months ago
I think we practiced a question like this where the PI helped us decide between projects. If I recall correctly, we always go for the one with the higher PI.
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Alishia
8 months ago
I'm a bit confused about the PI values. I thought a PI below 1 meant the project wasn't worth pursuing, so maybe we shouldn't pick Proposal A at all?
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Major
8 months ago
I remember that a PI greater than 1 indicates a positive NPV, so I think Proposal B is the one we should choose.
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Deonna
8 months ago
This question is testing our understanding of the profitability index and how it relates to NPV. I'll need to carefully think through the implications of the PI values provided for each proposal.
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Barrett
8 months ago
Based on the information given, I think the answer is that Jade would select Proposal B, and the PI indicates the NPV for that project is greater than zero. The higher PI suggests it's the more profitable option.
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Chauncey
8 months ago
Okay, let's see. The PI for Proposal B is greater than 1, so that must mean the NPV is positive. I'm pretty confident that's the right answer.
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Rasheeda
8 months ago
Hmm, this one seems tricky. I'll need to think carefully about the relationship between the profitability index and the NPV.
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Gertude
9 months ago
I'm a bit confused here. I know the PI is used to rank projects, but I'm not sure how to interpret the values in this case. I'll have to review my notes on profitability index.
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Ilona
9 months ago
Okay, I've got this. In Stock, Consumed, and Retired are the three baseline asset states that come to mind. I'm confident those are the correct answers.
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Julian
9 months ago
I think we need to consider the probability of having no defects as 1 minus the probabilities of having type A or type B defects.
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Nohemi
9 months ago
Always read each option completely. The subtle differences matter in these medical coding questions.
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Shaun
9 months ago
Hmm, I'm a bit unsure about this one. I'll need to review the Cloud Build documentation to make sure I understand the different options for running tests as part of the build process.
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Tarra
9 months ago
I'm a bit unsure about the other choices. <map> and <canvas> don't seem like they're just for formatting text.
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Haydee
9 months ago
Okay, I've got this. A risk-averse decision maker will accept a risk if it has a satisfactory potential return, not avoid all risks or always choose the lowest risk option. I'm confident option A is the correct answer here.
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