The Profitability Index (PI)of a Project Is 1

question 33

Essay

The profitability index (PI)of a project is 1.0.What do you know about the project's net present value (NPV)and its internal rate of return (IRR)?

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Definitions:

Cash Equivalents

Short-term investments with original maturities of three months or less that are readily convertible to cash and whose value is unlikely to change.

Highly Liquid

Assets that can be easily converted into cash with minimal impact on their value.

Direct Method

A method of presenting the operating activities section of the statement of cash flows that reports components of cash flows from operating activities as gross receipts and gross payments.