profitability index?

EBK CFIN
6th Edition
ISBN:9781337671743
Author:BESLEY
Publisher:BESLEY
Chapter9: Capital Budgeting Techniques
Section: Chapter Questions
Problem 10PROB
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11- A project requires an investment of $10 million and has an NPV of $16 million.
What is its profitability index?
a. 1.0
b. 1.6
c. 0.6
d. 3.2
12-A profitability index of .85 for a project means that:
a. the present value of benefits is 85% greater than the project's costs.
b. the project's NPV is greater than zero.
C. the project returns 85 cents in present value for each current dollar
invested.
d. the payback period is less than one year.
Transcribed Image Text:11- A project requires an investment of $10 million and has an NPV of $16 million. What is its profitability index? a. 1.0 b. 1.6 c. 0.6 d. 3.2 12-A profitability index of .85 for a project means that: a. the present value of benefits is 85% greater than the project's costs. b. the project's NPV is greater than zero. C. the project returns 85 cents in present value for each current dollar invested. d. the payback period is less than one year.
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