The Profitability Index Is the Ratio Of

question 56

Multiple Choice

The profitability index is the ratio of:

• A) average net income to average investment.
• B) internal rate of return to current market interest rate.
• C) net present value of cash flows to internal rate of return.
• D) net present value of cash flows to average accounting return.
• E) present value of cash flows to initial investment cost.

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Definitions:

Drawer

In accounting, the entity (person or organization) that issues or writes a bill of exchange, check, or draft, instructing another entity to pay.

Drawee

Bank that drawer has an account with.

Credits Account

A financial record that boosts a liability or equity account, or lowers an asset or expense account.

Drawee

The party in a bill of exchange who is directed to pay the specified amount, typically a bank.