If a Project Has a Profitability Index Greater Than 1

question 70

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.

---

Definitions:

Marginal Cost

The cost incurred from producing one additional unit of a product or service.

Renaissance Fair

A festival that recreates the atmosphere of the European Renaissance with performances, arts, crafts, and food reflective of the time period.

Efficient Market

A market in which asset prices fully reflect all available information.

Profit Opportunities

Situations or circumstances where businesses can generate earnings that are above the normal expected returns.