The profitability index is useful under quizlet

See Also: Profitability Index Method. Profitability Index Method Formula. Use the following formula where PV = the present value of the future cash flows in question.. Profitability Index = (PV of future cash flows) ÷ Initial investment. Or = (NPV + Initial investment) ÷ Initial Investment: As one would expect, the NPV stands for the Net Present Value of the initial investment.

The profitability index is the present value of cash inflows relative to the project cost. As such, it is a benefit/cost ratio, providing a measure of the relative profitability of a project. The profitability index decision rule is to accept projects with a PI greater than one, and to reject projects with a PI less than one. The profitability index: A. rule often results in decisions that conflict with the decisions based on the net present value rule. B. is useful as a decision tool when investment funds are limited and all available funds are allocated. C. method is most commonly used when deciding between mutually exclusive projects of varying size. D. D. profitability index modified internal rate of return A capital budgeting technique that converts a project's cash flows using a more consistent reinvestment rate prior to applying the Internal Rate of Return, IRR, decision rule. A. The project will not be acceptable under the payback rule. B. The project must have a profitability index that is equal to or greater than 1.0. C. The project must have a zero net present value. D. The project's internal rate of return must equal the required return. E. The project will still be acceptable if the discount rate is increased. The profitability index is a technique used to measure a proposed project's costs and benefits by dividing the projected capital inflow by the investment. The profitability index (PI) rule is a calculation of a venture's profit potential, used to decide whether or not to proceed. The profitability index (PI) refers to the ratio of discounted benefits over the discounted costs. It is an evaluation of the profitability of an investment and can be compared with the profitability of other similar investments which are under consideration. the profitability index is also referred to as benefit-cost ratio, cost-benefit ratio, or even capital rationing.

According to the CAPM, what is the single factor that explains the differences in returns across securities. The expected risk premium on the market portfolio. A particular asset has a beta of 1.2 and an expected return of 10%. The expected return on the market portfolio is 13% and the risk free is 5%.

The profitability index (PI) rule is a calculation of a venture's profit potential, used to decide whether or not to proceed. The profitability index (PI) refers to the ratio of discounted benefits over the discounted costs. It is an evaluation of the profitability of an investment and can be compared with the profitability of other similar investments which are under consideration. the profitability index is also referred to as benefit-cost ratio, cost-benefit ratio, or even capital rationing. The profitability index is useful under: A. Capital rationing B. Mutually exclusive projects C. Non-normal projects D. None of for Teachers for Schools for Working Scholars for College Credit. Question: The Profitability Index Is Useful Under: A. Capital Rationing B. Mutually Exclusive Projects C. Non-normal Projects D. None Of The Above. This problem has been solved! See the answer. The profitability index is useful under: A. Capital rationing. B. Mutually exclusive projects. The profitability index, also known as the excess present value index, is the ratio of the present value of future net cash inflows to the initial net cash investment (discounted cash outflows). This tool is a variation of the NPV method that facilitates comparison of different-sized investments.

A. The project will not be acceptable under the payback rule. B. The project must have a profitability index that is equal to or greater than 1.0. C. The project must have a zero net present value. D. The project's internal rate of return must equal the required return. E. The project will still be acceptable if the discount rate is increased.

23 Nov 2015 Why did a profitable company decide to raise venture capital for the first in 2005 by Andrew Sutherland, then a 15-year-old student, Quizlet  describing profitability, liquidity, leverage, activity and shareholders' return ratios. going to invest in areas beneficial to themselves first, or else charge the local www.abb.se/swg/switchgear/index.htm, November 1997. 44. First source = you  Guide to Profitability Index Formula. Here we discuss how to calculate the Profitability Index in excel along with examples & downloadable excel template. profitability index is useful under capital rationing by combining, lending and borrowing at the risk-free rate with the efficient portfolios, we can(3 things)*** All of the following are useful for understanding Profitability Index, except: A. A profitability index less than 1 equals a negative NPV. B. A profitability index greater than 1 equals a positive NPV. C. The denominator for the profitability index is the cost of the project. D. According to the CAPM, what is the single factor that explains the differences in returns across securities. The expected risk premium on the market portfolio. A particular asset has a beta of 1.2 and an expected return of 10%. The expected return on the market portfolio is 13% and the risk free is 5%.

CHAPTER-5 Analysis of Profitability Particular Page No. Introduction 109 profitability may be regarded as a relative term measurable in terms of profit and its relation ―It is useful in describing the two basic Forces bearing upon ultimate results and .

4 Dec 2018 In order to sell premium materials on Quizlet, one must first apply and be approved as a “Verified Creator.” The process includes a thorough  23 Nov 2015 Why did a profitable company decide to raise venture capital for the first in 2005 by Andrew Sutherland, then a 15-year-old student, Quizlet 

The Profitability Index (PI) measures the ratio between the present value of future cash flows to the initial investment. The index is a useful tool for ranking investment projects and showing the value created per unit of investment. The Profitability Index is also known as the Profit Investment Ratio (PIR) or the Value Investment Ratio (VIR).

The profitability index is the present value of cash inflows relative to the project cost. As such, it is a benefit/cost ratio, providing a measure of the relative profitability of a project. The profitability index decision rule is to accept projects with a PI greater than one, and to reject projects with a PI less than one. The profitability index: A. rule often results in decisions that conflict with the decisions based on the net present value rule. B. is useful as a decision tool when investment funds are limited and all available funds are allocated. C. method is most commonly used when deciding between mutually exclusive projects of varying size. D.

23 Nov 2015 Why did a profitable company decide to raise venture capital for the first in 2005 by Andrew Sutherland, then a 15-year-old student, Quizlet  describing profitability, liquidity, leverage, activity and shareholders' return ratios. going to invest in areas beneficial to themselves first, or else charge the local www.abb.se/swg/switchgear/index.htm, November 1997. 44. First source = you  Guide to Profitability Index Formula. Here we discuss how to calculate the Profitability Index in excel along with examples & downloadable excel template. profitability index is useful under capital rationing by combining, lending and borrowing at the risk-free rate with the efficient portfolios, we can(3 things)*** All of the following are useful for understanding Profitability Index, except: A. A profitability index less than 1 equals a negative NPV. B. A profitability index greater than 1 equals a positive NPV. C. The denominator for the profitability index is the cost of the project. D.