If a project has a zero net present value, its profitability index will be
A) one.
B) greater than one.
C) less than one.
D) undeterminable.

Question

Quizplus · Accepted Answer

The profitability index is calculated as the present value of future cash flows divided by the initial investment. If a project has a zero net present value, it means the present value of future cash flows equals the initial investment, making the profitability index equal to one.

If a Project Has a Zero Net Present Value, Its