Asked by
Aruzhan Tanirbergen
on Dec 05, 2024
Verified
When assessing three projects with profitability indexes of 1.05, 1.7 and 1.2, unless all projects have the same lives it is impossible to rank them accurately.
Profitability Indexes
A calculation used to assess the attractiveness of an investment by dividing the present value of cash flows by the initial investment.
- Develop an understanding of how to appraise and order investment projects through different financial indicators including net present value (NPV), internal rate of return (IRR), and profitability indexes.
Verified Answer
KS
Learning Objectives
- Develop an understanding of how to appraise and order investment projects through different financial indicators including net present value (NPV), internal rate of return (IRR), and profitability indexes.