AHIP Health Plan Finance and Risk Management AHM-520 Question # 107 Topic 5 Discussion
AHM-520 Exam Topic 5 Question 107 Discussion:
Question #: 107
Topic #: 5
The following statements are about a health plan's capital budgeting process. Select the answer choice containing the correct statement.
A.
Under sensitivity analysis, a health plan ranks all capital project proposals according to expected rates of return and accepts only those proposals with the highest rankings.
B.
A project that has a profitability index of 0.0 has an NPV of zero.
C.
An underlying assumption of capital budgeting is that a health plan should keep its investing decisions separate from its financing decisions.
D.
Under the internal rate of return (IRR) method, if a project's IRR is less than a health plan's weighted average cost of capital (WACC), then the project's benefits should exceed its costs and the health plan should accept the project.
Chosen Answer:
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