The profitability index technique is most meaningful when a project has only one cash outflow which occurs at its beginning, and that is followed by a series of inflows that are constant in amount and regular in time.

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The profitability index technique can be used for projects with multiple cash outflows and inflows that are not necessarily constant or regular in time. However, it is most accurate when evaluating projects with a single upfront cost and regular, predictable cash inflows over time.

The Profitability Index Technique Is Most Meaningful When a Project