Use the table for the question(s)below.
Consider the following two projects:

-The profitability index for project A is closest to:
A)12.04
B)0.12
C)21.65
D)0.17

Question

Use the table for the question(s)below.
Consider the following two projects:
 
-The profitability index for project A is closest to:
A)12.04 
B)0.12 
C)21.65 
D)0.17

Quizplus · Accepted Answer

The profitability index is calculated by dividing the present value of future cash flows by the initial investment. Given the options, a value like 0.12 is the most realistic, as values like 12.04 or 21.65 would imply an exceptionally high return, and 0.17 is also a possible but less typical value for such an index.

Use the Table for the Question(s)below