The ratio between the present value of a project's cash inflows and the present value of its initial investment is called the:
A) MIRR.
B) IRR.
C) PI.
D) NPV.

Question

Quizplus · Accepted Answer

The ratio between the present value of a project's cash inflows and the present value of its initial investment is called the profitability index (PI). PI represents the amount of return per unit of investment. A PI of greater than 1 indicates a positive net present value and a good investment opportunity. Therefore, Choice C is the correct answer.

The Ratio Between the Present Value of a Project's Cash