If a project's profitability index is less than 1,the project's
A)discount rate is above its cost of capital.
B)internal rate of return is less than zero.
C)payback period is infinite.
D)net present value is negative.

Question

Quizplus · Accepted Answer

A profitability index (PI) less than 1 indicates that the project's present value of cash inflows is less than the present value of its cash outflows. This means that the net present value (NPV) of the project is negative. Therefore, option D is the best choice.

If a Project's Profitability Index Is Less Than 1,the Project's