If the net present value of a project is zero,then the profitability index will equal one.

Name: If the net present value of a project is zero,then the profitability index will equal one.
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Quizplus · Accepted Answer

This statement is true. The profitability index (PI) is calculated by dividing the present value (PV) of future cash flows by the initial investment (I). If the NPV is zero, it means that the PV of future cash flows is equal to the initial investment. Therefore, PI = PV of future cash flows / I = 1.

If the Net Present Value of a Project Is Zero,then