When a firm is faced with capital rationing, how can the profitability index (PI) be used to

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When a firm is faced with capital rationing, how can the profitability index (PI) be used to select the best projects? Why does choosing the projects with the highest PI not always lead to the best decision?

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Introduction to Corporate Finance

ISBN: 978-0324657937

2nd edition

Authors: Scott B. Smart, William L Megginson

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Question Posted: May 13, 2015 05:55 AM

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When a firm is faced with capital rationing, how can the profitability index (PI) be used to

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When managers are constrained by the availability of funds and they cannot invest in every project t...View the full answer

Introduction to Corporate Finance

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