Home › BBA Finance › Financial Management › Capital Budgeting › The measure that divides the present value of be…
The measure that divides the present value of benefits by the present value of costs is the:
AProbability index
BProperty index
CProvision index
DProfitability index
Answer & Solution
Correct answer: D. Profitability index
1. It uses the same inputs as the net value measure.
2. The result is expressed as a ratio.
3. It is the profitability index.
_Source: OpenStax Principles of Finance 2e, Chapter 16, How Companies Think about Investing._
Related questions
Compared with payback, both the net present value and the internal rate of return take accWhen using the payback method, a company must itself set a length of time as its:The payback measure is described as giving managers information about how long money will The reason a firm might still prefer that costlier machine is that it will generate more:In the comparison offered, the heavy-duty machine costs:Two machines that cannot both be bought, so only one may be chosen, are described as:When the net present value of a project is greater than zero, that ratio will be:In that ratio, the numerator is the present value of the project's: