How Should a Profitability Index of Zero Be Interpreted

question 51

Multiple Choice

How should a profitability index of zero be interpreted?

• A)The present value of the cash flows subsequent to the initial cash flow is equal to (−1 × Initial cash flow).
• B)The project has an internal rate of return equal to the discount rate.
• C)The project produces a net income of zero for every year of its life.
• D)The project's cash flows subsequent to the initial cash flow have a present value of zero.
• E)The project also has a net present value of zero.

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Definitions:

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