The Profitability Index Is Computed by Dividing the

question 125

Multiple Choice

The profitability index is computed by dividing the

• A) total cash flows by the initial investment.
• B) present value of cash flows by the initial investment.
• C) initial investment by the total cash flows.
• D) initial investment by the present value of cash flows.

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Definitions:

Sample

A subset of individuals or observations from a population used to estimate parameters or statistics of the whole population.

Mean

The average of a set of numbers, calculated by summing them up and dividing by the number of summands.

Standard Deviation

A measure of the amount of variability or dispersion of a set of values around the mean.

Confidence Interval

A span of numbers, calculated from observed data statistics, that probably encompasses an unknown parameter of a population.