Question

The Profitability Index (P

  • I is an important capital budgeting tool that helps assess project feasibility. It is mathematically defined as:
A Initial investment cost divided by total cash inflows
B Ratio of the present value of future cash inflows to the initial investment cost
C The internal rate of return (IRR) minus the discount rate
D The payback period adjusted for depreciation
E The ratio of book value to market capitalization
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