When Calculating the Profitability Index, Which Ratio Would You Use

question 29

Multiple Choice

When calculating the profitability index, which ratio would you use (using the definitions in Arnold's textbook) ?

• A) Initial outlay/Gross present value
• B) Initial outlay/Gross present value.
• C) Gross present value/Initial outlay
• D) Gross present value/Net present value

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Definitions:

Guinness Book

A reference book published annually, listing world records both of human achievements and the extremes of the natural world.

Tertiary

Refers to the third level or stage in a sequence; in education, it commonly relates to post-secondary education such as universities and colleges.

Quaternary

Relating to the fourth stage or division, often used in context of geological periods or the sector of the economy that deals with knowledge-based activities.

Historiography

The study of the methods and principles through which history is written, including the different perspectives and interpretations.