Practice mode Finance

What purpose does the profitability index serve in capital budgeting?

Correct answer B. Evaluate projects

Explanation

As a ratio of the present value of inflows to the initial investment, the profitability index helps assess projects, with values above 1 indicating a positive NPV.

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What purpose does the profitability index serve in capital budgeting?

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What purpose does the profitability index serve in capital budgeting?

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