Trovato Corporation is considering a project that would require an investment of $56,000. No other cash outflows would be involved. The present value of the cash inflows would be $66,640. The profitability index of the project is closest to (Ignore income taxes.):

Question

Quizplus · Accepted Answer

Profitability Index = (Present value of cash inflows / Initial investment) = $66,640 / $56,000 = 1.19

Trovato Corporation Is Considering a Project That Would Require an Investment