If two projects require the same amount of investment, then the preference ranking computed using either the profitability index or the net present value would be the same

Question

Quizplus · Accepted Answer

Both the profitability index and net present value take into account the amount of investment required and the cash flows generated by the project. Therefore, if two projects require the same amount of investment, their preference ranking based on either of these methods would be the same.

If Two Projects Require the Same Amount of Investment, Then