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:

Market Interest Rate

The prevailing rate at which borrowers can obtain loans and savers can earn returns on their deposits in the financial markets.

Investment Demand Curve

A graphical representation showing the inverse relationship between the interest rate and the total amount invested.

Movement Along

A movement along a demand or supply curve represents a change in the quantity demanded or supplied as a result of a change in the good's price, without shifting the curve itself.

Shift Of

An alteration in the position or direction of something, often used in economic contexts to describe changes in supply, demand, or other market variables.