If the Net Present Value (NPV) is positive, the Profitability Index (PI) will be ____________?

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Accepted Answer

Greater than two - The Profitability Index (PI) is calculated by dividing the present value of future cash inflows by the initial investment. If NPV is positive, it means inflows exceed the investment, making the PI greater than one. This indicates that the project adds value and is acceptable.

MCQ Detailed View

If the Net Present Value (NPV) is positive, the Profitability Index (PI) will be ____________?

Detailed Explanation

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MCQ Detailed View

If the Net Present Value (NPV) is positive, the Profitability Index (PI) will be ____________?

Detailed Explanation

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In cash flow analysis, two projects are compared using a common life approach, which is classified as…

In capital budgeting, the Internal Rate of Return (IRR) of a project is classified as its ____________?…

In evaluating independent projects, the results of Internal Rate of Return (IRR) and Net Present Value…