Question

A project' profitability index is equal to the ................ ratio of the of a project' future cash flows to the project'* ................

a) present value; initial cash outlay

b) net present value; initial cash outlay

c) present value; depreciable basis

d) net present value; depreciable basis

Answer 1

A project' profitability index is equal to the ratio of the present valueof a project' future cash flows to the project'* initial cash outlay