Projects should be accepted when the proﬁtability index is less than 1.

Name: Projects should be accepted when the proﬁtability index is less than 1.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Projects should only be accepted if the profitability index is greater than 1, which indicates that the present value of expected future cash flows is greater than the initial investment. A profitability index of less than 1 would indicate that the project is not expected to generate a positive net present value.

Projects Should Be Accepted When the Proﬁtability Index Is Less