Fundamentals of Corporate Finance, Student Value Edition (4th Edition)
Fundamentals of Corporate Finance, Student Value Edition (4th Edition)
4th Edition
ISBN: 9780134476117
Author: Berk, Jonathan; DeMarzo, Peter; Harford, Jarrad
Publisher: PEARSON
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Chapter 8, Problem 12CC
Summary Introduction

Profitability Index: The Profitability index is a financial method which analyzes the net present value per unit required or consumed. The Profitability index is that method which is required to take decisions of the acceptance or rejection of the project by make comparison of cash flows with the initial investments required.

Net Present Value Fundamentals of Corporate Finance, Student Value Edition (4th Edition), Chapter 8, Problem 12CC , additional homework tip  1 Net present value refers the variance between the present value of cash flows and the present value of cash outflows.

The value of Fundamentals of Corporate Finance, Student Value Edition (4th Edition), Chapter 8, Problem 12CC , additional homework tip  2 is greater than 0 then the project should be considered for the acceptance, otherwise, the project is rejected.

To Explain: The profitability index.

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