American_Bankers_Association
CTFA · Question #293
A project's profitability index is equal to the ratio of the of a project's future cash flows to the project's .
The correct answer is A. Present value; initial cash outlay. See the full explanation below for the reasoning.
Investment Management
Question
A project's profitability index is equal to the ratio of the of a project's future cash flows to the project's .
Options
- APresent value; initial cash outlay
- BNet present value; initial cash outlay
- CPresent value; depreciable basis
- DNet present value; depreciable basis
How the community answered
(28 responses)- A86% (24)
- B7% (2)
- C4% (1)
- D4% (1)
Topics
#profitability index#present value#initial cash outlay#capital budgeting
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