AHIP Exam AHM-520 Topic 6 Question 93 Discussion

Actual exam question for AHIP's AHM-520 exam

Question #: 93
Topic #: 6

[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:

AProposal A, and the PI indicates that the net present value (NPV) for this project is less than zero

BProposal A, and the PI indicates that the net present value (NPV) for this project is greater than zero

CProposal B, and the PI indicates that the net present value (NPV) for this project is less than zero

DProposal B, and the PI indicates that the net present value (NPV) for this project is greater than zero

Show Suggested Answer

Suggested Answer: C

by Cathrine at Jul 18, 2024, 07:15 PM

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Raina

4 months ago

That's correct, so Proposal B would be selected.

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Merilyn

5 months ago

But doesn't a PI less than 1 indicate a negative NPV?

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Gilma

5 months ago

I agree with Raina, Proposal A has a PI greater than 1.

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Von

5 months ago

Haha, this question is a real mind-bender! But I agree with Kris, D seems like the best choice here.

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Lenna

4 months ago

So, Proposal B would most likely be selected by Jade Health Plan.

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Tracey

4 months ago

Definitely, the PI indicates that the net present value for Proposal B is greater than zero.

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Eun

4 months ago

Yeah, Proposal B with a PI of 1.05 seems like the better option.

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Melissia

4 months ago

I think D is the correct choice too.

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Kris

5 months ago

I'm torn between B and D, but I'm leaning towards D. Proposal B has a higher PI, so the NPV must be greater than zero.

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Veronika

5 months ago

Woah, hold up! The question says the PI indicates the NPV, not that the PI is greater than 1. I think option D is the way to go.

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Audra

3 months ago

Definitely, Proposal B seems like the most likely selection based on the information provided.

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Tiera

3 months ago

Yeah, I think the PI indicating that the NPV is greater than zero points to Proposal B.

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Stephanie

4 months ago

I agree with you, option D seems to be the correct choice.

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German

4 months ago

So, Proposal B would most likely be selected by Jade Health Plan.

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Solange

5 months ago

Yeah, the PI is just a ratio that indicates the NPV, not necessarily that it has to be greater than 1.

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Anthony

5 months ago

I agree with you, option D seems to be the correct choice.

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Raina

5 months ago

I think the answer is B.

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Leslie

5 months ago

Hmm, this seems straightforward. If the PI for Proposal B is greater than 1, then the NPV must be positive, right?

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Cora

5 months ago

B) Proposal A, and the PI indicates that the net present value (NPV) for this project is greater than zero

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Lyla

5 months ago

A) Proposal A, and the PI indicates that the net present value (NPV) for this project is less than zero

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