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Exam AHM-520 topic 1 question 108 discussion

Actual exam question from AHIP's AHM-520
Question #: 108
Topic #: 1
[All AHM-520 Questions]

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.
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Suggested Answer: C 🗳️
by gemazyni at April 5, 2025, 3:02 p.m.

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