Use the table for the question(s)below.
Consider the following two projects with cash flows in $:
-The profitability index for project B is closest to:
A)23.34.
B)12.64.
C)0.17.
D)0.12.

Question

Use the table for the question(s)below.
Consider the following two projects with cash flows in $: 
-The profitability index for project B is closest to:
A)23.34. 
B)12.64. 
C)0.17. 
D)0.12.

Quizplus · Accepted Answer

The profitability index is calculated as the present value of future cash flows divided by the initial investment. A profitability index of 0.17 indicates that for every dollar invested, the project returns 17 cents in present value terms.

Use the Table for the Question(s)below