Based on the profitability index of _____ for this project,you should _____ the project.
A).97; accept
B)1.05; accept
C)1.16; accept
D).97; reject
E)1.05; reject

Question

Quizplus · Accepted Answer

The profitability index is a measure of the present value of future cash flows relative to the initial investment. A profitability index greater than 1 indicates that the project is expected to generate positive net present value and should be accepted. Therefore, choices A, B, and E should be rejected because their profitability indices are less than 1. Choice C has a profitability index of 1.16, indicating that the project is expected to generate positive return on investment and should be accepted.

Based on the Profitability Index of _____ for This Project,you