We Compute the Profitability Index of a Capital-Budgeting Proposal by

question 37

Multiple Choice

We compute the profitability index of a capital-budgeting proposal by

• A) multiplying the IRR by the cost of capital.
• B) dividing the present value of the annual after-tax cash flows by the cost of capital.
• C) dividing the present value of the annual after-tax cash flows by the cost of the project.
• D) multiplying the cash inflow by the IRR.

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Definitions:

Specific Undertaking

A precise commitment or obligation that a party agrees to carry out.

Limited Liability Partnership

A partnership in which some or all partners (depending on the jurisdiction) have limited liabilities, protecting them from the debts of the partnership and other partners' actions.

Normal Joint

This term does not correspond to a widely recognized legal term, likely referring to a common or typical joint in physical or structural contexts. NO.

Tax Benefits

Financial advantages given by governments, reducing taxpayer burden and incentivizing certain behaviors or investments.