If a Project Has a Positive Net Present Value, Its

question 98

Multiple Choice

If a project has a positive net present value, its profitability index will be

• A) one.
• B) greater than one.
• C) less than one.
• D) undeterminable.

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Definitions:

Capital Expenditures

Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings, or equipment.

Free Cash Flow

The cash that a business produces after deducting cash outflows needed for operational activities and the upkeep of its fixed assets.

Cash Dividends

Distributions of earnings paid to shareholders in the form of cash.

Free Cash Flow

The amount of cash a company generates after accounting for cash outflows to support operations and maintain its capital assets.