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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:
Suggested Answer: C
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20 comments · newest first
XO
Xochitl
11 months ago
So, does that mean A is a total no-go?
IL
Iluminada
11 months ago
Definitely B, higher PI means better profitability!
CH
Chery
12 months ago
Wait, how can A have a positive NPV if its PI is 0.45? That seems off.
HE
Herman
12 months ago
I agree, B is the way to go! A's PI is below 1.
JA
Janae
1 year ago
Proposal B has a PI of 1.05, so it’s definitely the better choice!
BU
Bulah
1 year 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.
SH
Sharmaine
1 year 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.
AL
Alishia
1 year 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?
MA
Major
1 year ago
I remember that a PI greater than 1 indicates a positive NPV, so I think Proposal B is the one we should choose.
DE
Deonna
1 year 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.
BA
Barrett
1 year 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.
CH
Chauncey
1 year 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.
RA
Rasheeda
1 year ago
Hmm, this one seems tricky. I'll need to think carefully about the relationship between the profitability index and the NPV.
GE
Gertude
1 year 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.
IL
Ilona
1 year 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.
JU
Julian
1 year 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.
NO
Nohemi
1 year ago
Always read each option completely. The subtle differences matter in these medical coding questions.
SH
Shaun
1 year 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.
TA
Tarra
1 year ago
I'm a bit unsure about the other choices. <map> and <canvas> don't seem like they're just for formatting text.
HA
Haydee
1 year 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.