CMA Final Paper 14 (SFM) Practice Questions - CMA Final Paper 14 Strategic Financial Management Exam

The Profitability Index (PI) of a project is 1.25. This indicates that:

The present value of inflows is 1.25 times the initial outlay, so the project is acceptable The project should be rejected NPV is exactly zero The IRR equals 25%

Correct Answer:

The present value of inflows is 1.25 times the initial outlay, so the project is acceptable

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