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  • βœ–

      Question

      Profitability Index less than 1

      indicates:
      A Project should be accepted Correct Answer Incorrect Answer
      B Project should be rejected Correct Answer Incorrect Answer
      C Project is indifferent Correct Answer Incorrect Answer
      D Cannot say Correct Answer Incorrect Answer

      Solution

      PI = PV of Inflows/Initial Investment. PI < 1 means PV of inflows < Investment, so NPV negative β†’ reject.

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