If net present value is positive, then profitability index will be__________?
Correct answer: D. Greater than one
- A. Greater than two
- B. Equal to
- C. Less than one
- D. Greater than one
Explanation
The profitability index equals the present value of future cash inflows divided by the initial investment. A positive NPV means the inflows exceed the investment, so the index is greater than one.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? support@testustad.com
About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
Practise Business Finance
975 free Business Finance MCQs from Management Sciences, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Exams that ask Management Sciences questions like this
Management Sciences is on 2 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Business Finance questions
Situation in which firm limits expenditures on capital is classified as________?
An internal rate of return in capital budgeting can be modified to make it representative of_________?
Other factors held constant, greater project liquidity is because of___________?
Sum of discounted cash flows is best defined as____________?
Cash outflows are costs of project and are represented by___________?
In large expansion programs, increased riskiness and flotation cost associated with project can cause_______________?