The Present Value Index Is Computed Using Which of the Following

question 83

Multiple Choice

The present value index is computed using which of the following formulas?

• A) Amount to be invested/Average rate of return
• B) Total present value of net cash flow/Amount to be invested
• C) Total present value of net cash flow/Average rate of return
• D) Amount to be invested/Total present value of net cash flow

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Definitions:

Net Income

This is the total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue, showing the company's profitability.

Income Ratio

A financial metric that measures the amount of income generated relative to another financial metric, such as sales or assets.

Net Income

The residual income of a firm after adding total revenue and gains and subtracting all expenses and losses for the reporting period, effectively the company's profit.

Subsidiary Ledger

A detailed ledger that contains the individual accounts related to a specific main account, aiding in the organization and breakdown of financial information.