Community Hospital is evaluating three investments. Which one has the highest profitability index?

• A. The radiology investment
• B. The cardiology investment
• C. The pharmacy investment
• D. All three are equally profitable

Answer: (D)

Profitability index measures how much value is created for every dollar invested by discounting future cash inflows and dividing by the initial investment. When comparing three investments, you’d normally pick the one with the highest PI. If the calculations show the same PI for all three, none has a higher value per dollar invested, so they are equally attractive on this metric. The given answer reflects that equality—each investment yields the same value per dollar invested. If you need to choose a single project in practice, you’d then look at other measures like NPV or IRR or consider risk and strategic fit to break the tie.