alleryStart learning →The profitability index takes the same inputs as net present value and converts them into a:
ARumour
BRibbon
CRefund
DRatio
Answer & Solution
Correct answer: D. Ratio
1. Net present value gives an amount of money.
2. The profitability index uses the same inputs.
3. It converts the results to a ratio.
4. So the output is a ratio rather than a sum.
_Source: OpenStax Principles of Finance (CC BY 4.0), Ch 16 'How Companies Think about Investing', sections 16.1-16.5_
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