A project requires an investment of $2,500 and has a net present value of $430. If the IRR is 10%, what is the profitability index for the project?

Question

Quizplus · Accepted Answer

The profitability index is calculated by dividing the present value of the cash inflows by the initial investment. 
PV of cash inflows = $2,500 + $430 = $2,930
Profitability index = $2,930/$2,500 = 1.17
Therefore, the answer is D.

A Project Requires an Investment of $2,500 and Has a Net