If an investment has a(n) ___________ of 1.2 it can be said that the investment generates $1.20 in present value beneﬁts for each dollar of invested costs.
A) Proﬁtability index.
B) Net present value.
C) Internal rate of return.
D) Payback period.
E) Average accounting return.

Question

Quizplus · Accepted Answer

A profitability index measures the ratio of present value benefits to the costs of an investment. A value of 1.2 indicates that for every dollar invested, there is a present value benefit of $1.20. The other options (B, C, D, and E) do not directly calculate this ratio.

If an Investment Has A(n) ___________ of 1