The Profitability Index (PI) of a project is 1.25....

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

Question Number 5

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

Related questions :

A project requires an initial outlay of Rs.10,00,000 and is expected to generate...
Under the Internal Rate of Return (IRR) method, a conventional independent proje...
When NPV and IRR give conflicting rankings for two mutually exclusive projects, ...
A non-conventional project has cash flows that change sign more than once over i...
Under capital rationing with divisible projects, projects should be selected to:
The Risk-Adjusted Discount Rate (RADR) method incorporates project risk by:
The coefficient of variation is used to compare the risk of two investment proje...

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

Question Number 5

Count Down:

Related questions :