A project costing Rs 2,50,000 has a PI of 1.2. What is its NPV?
ARs 50,000
BRs 30,000
CRs 1,20,000
DRs 3,00,000
Answer & Solution
Correct answer: A. Rs 50,000
PV is 1.2 x 250,000 = 300,000, so NPV is 300,000 minus 250,000 = Rs 50,000.
Keep practising Profitability Index
Browse all Profitability Index questions for CA Inter, or explore more Financial Management topics.
Related questions
Which rule applies to a PI result of 1.092 for an independent project?Perpetual inflow of Rs 12,000 a year at 10 percent against an outlay of Rs 1,00,000 gives Which of these is a technique that ignores the time value of money?A project has NPV zero at 18 percent discount rate. What is its IRR?If IRR exceeds the cost of capital on a conventional project, what is NPV?Which discount rate is often used when discounting project cash flows in NPV?Why is NPV on after-interest cash flows wrong?What is a limitation of the NPV approach regarding non-financial matters?