If a Company Has Computed the Profitability Index of an Investment

question 30

Multiple Choice

If a company has computed the profitability index of an investment project as 1.15, then

• A)the project's internal rate of return is less than the discount rate.
• B)the project's internal rate of return is greater than the discount rate.
• C)the project's internal rate of return is equal to the discount rate.
• D)the relationship of the rate of return and the discount rate is impossible to determine from the data given.

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Definitions:

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The systematic investigation into and study of materials and sources to establish facts and reach new conclusions.

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