[amp_mcq option1=”greater than two” option2=”equal to” option3=”less than one” option4=”greater than one” correct=”option4″]<\/p>\n
The correct answer is D. greater than one.<\/p>\n
The profitability index (PI) is a measure of a project’s profitability relative to its initial investment. It is calculated by dividing the project’s net present value (NPV) by its initial investment. A PI greater than one indicates that the project is profitable, while a PI less than one indicates that the project is not profitable.<\/p>\n
The NPV is a measure of the present value of all future cash flows from a project, discounted at a rate that reflects the project’s risk. A positive NPV indicates that the project is expected to generate more cash than it costs to undertake, while a negative NPV indicates that the project is expected to lose money.<\/p>\n
Therefore, if the NPV is positive, then the PI must also be positive, since the PI is simply the NPV divided by the initial investment.<\/p>\n","protected":false},"excerpt":{"rendered":"
[amp_mcq option1=”greater than two” option2=”equal to” option3=”less than one” option4=”greater than one” correct=”option4″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[945],"tags":[],"class_list":["post-47831","post","type-post","status-publish","format-standard","hentry","category-financial-management","no-featured-image-padding"],"yoast_head":"\n