One criterion that managers sometimes apply in ranking investment proposals is called the:

A) profitability index.
B) annuity index.
C) investment opportunity index.
D) capital ranking approach.

The profitability index is a criterion used by managers to rank investment proposals based on the present value of future cash flows compared to the initial investment cost. It is calculated by dividing the present value of expected cash flows by the initial investment cost. The higher the profitability index, the more attractive the investment proposal. Therefore, A is the best choice because it directly relates to the criteria used for ranking investment proposals.