Calculate the profitability index for a project that has a net present value equal to -$10,000. The project's net investment is $20,000, and the firm has a 40 percent marginal tax rate.
A) -0.5
B) 0
C) 0.8
D) None of the above

Name: Calculate the profitability index for a project that has a net present value equal to -$10,000. The project's net investment is $20,000, and the firm has a 40 percent marginal tax rate. A) -0.5 B) 0 C) 0.8 D) None of the above
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Question

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Solution:
PI = $10,000 / $20,000 = 0.5

Calculate the Profitability Index for a Project That Has a Net