Question

In: Finance

As a general rule, if using the Profitability Index as a guide to accept/reject a project,...

As a general rule, if using the Profitability Index as a guide to accept/reject a project,
you should accept the project if the Profitability Index is
            a equal to 0
            b greater than 0
            c greater than 1
            d greater than the IRR

Solutions

Expert Solution

Profitability Index = Present value of cash Inflows/Present value of cash outflows

You should accept the Project if Profitability Index is greater than 1.

Answer C


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