Determine the Project's NPV If the Profitability Index Is 1

question 110

Multiple Choice

Determine the project's NPV if the Profitability Index is 1.4; and the investment value is $500,000.

• A)$25,000
• B)$75,000
• C)$200,000
• D)$250,000

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Definitions:

Profit Centres

Divisions or segments of a business with direct responsibility for generating profits.

External Sales

Sales made to customers outside of the company, as opposed to internal transactions within the company.

Total Assets

The sum of all the assets owned by a company, including both current and non-current assets.

Return on Investment

A financial metric used to measure the profitability or efficiency of an investment, calculated by dividing net profit by the initial cost of the investment.