When using a profitability index (ratio of net present value to initial investment)to select projects,a value of 0.63 is preferred over a value of 0.21.

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A profitability index measures the present value of future cash flows against the initial investment. The higher the index, the more desirable the project. Therefore, a value of 0.63 is preferred over 0.21 as it indicates a higher return on investment.

When Using a Profitability Index (Ratio of Net Present Value