The net present value of an investment project is $28,842 and its project profitability index is 0.1518. The initial investment in this project was:
A)$190,000
B)$25,041
C)$215,800
D)$185,200

Question

Quizplus · Accepted Answer

The project profitability index (PPI) is calculated as the net present value (NPV) divided by the initial investment. Given PPI = 0.1518 and NPV = $28,842, the initial investment can be calculated as $28,842 / 0.1518 = $190,000.

The Net Present Value of an Investment Project Is $28,842