When the investment cannot be delayed,the optimal rule is to invest whenever ________ is greater than zero.
A) the profitability index
B) the payback period
C) the internal rate of return
D) the discounted payback period

Question

Quizplus · Accepted Answer

The profitability index (PI) is a measure used to evaluate the attractiveness of an investment opportunity. It is calculated as the present value of future cash flows divided by the initial investment. When the PI is greater than zero, it indicates that the present value of future cash flows exceeds the initial investment, making it an optimal time to invest if the investment cannot be delayed.

When the Investment Cannot Be Delayed,the Optimal Rule Is to Invest