Which one of the following indicates that a project should be rejected? Assume the cash flows are normal, i.e., the initial cash flow is negative.
A)Average accounting return that exceeds the requirement
B)Payback period that is shorter than the requirement period
C)Positive net present value
D)Profitability index less than 1.0
E)Internal rate of return that exceeds the required return

Question

Quizplus · Accepted Answer

A profitability index less than 1.0 indicates that the present value of future cash flows is less than the initial investment, suggesting the project should be rejected.

Which One of the Following Indicates That a Project Should