Whenever the Net Present Value of a Project Is Positive

question 113

True/False

Whenever the net present value of a project is positive, the profitability index is greater or equal to 1.0.

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Definitions:

After-Tax Discount Rate

A discount rate that has been adjusted for the effect of taxes, utilized in evaluating the net present value (NPV) of an investment after taxes.

Straight-Line Depreciation

A method of calculating the depreciation of an asset where its cost is evenly spread across its useful life.

Initial Investments

The initial amount of money spent to start a project, purchase assets, or establish a business.

After-Tax Discount Rate

The rate of return after taxes have been calculated, used in evaluating the profitability of investment opportunities.