alleryStart learning →The NPV method and the profitability index method will always agree on:
AThe chosen source of funding
BThe accept or reject answer
CThe exact ranking of projects
DThe precise payback in years
Answer & Solution
Correct answer: B. The accept or reject answer
1. A positive net present value always means an index above one.
2. A negative net present value always means an index below one.
3. The two methods always give the same answer to the accept-or-reject question.
4. They can still differ in how useful they are for ranking.
_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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