If a Project Has a Profitability Index Greater Than 1

question 90

Multiple Choice

If a project has a profitability index greater than 1,

• A) the npv will also be positive.
• B) the irr will be higher than the required rate of return.
• C) the present value of future cash flows will exceed the amount invested in the project.
• D) all of the above.

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Definitions:

Equilibrium Price

The cost where the supply of goods meets the demand for those goods.

Tax Revenues

The funds collected by governments through the process of levying taxes.

Point Elasticity

The measure of how much the quantity demanded of a good responds to a change in price at a specific point on the demand curve.

Producer Surplus

The difference between the amount a producer is paid for a good and the minimum amount they are willing to accept for producing it.