The ____ is interpreted as the ____ for each dollar of initial investment.
A) net present value; present value return
B) profitability index; cash flow return
C) profitability index; present value return
D) none of the above

Question

Quizplus · Accepted Answer

The profitability index is a ratio that measures the present value of future cash flows to the initial investment. Therefore, the profitability index is interpreted as the present value return for each dollar of initial investment. Option A is incorrect because the net present value is an absolute value, not a ratio. Option B is incorrect because cash flow return is not a commonly used financial term. Option D is incorrect because there is a correct answer.

The ____ Is Interpreted as the ____ for Each Dollar

The Is Interpreted as the for Each Dollar