PREVIOUS YEAR SOLVED PAPERS - UGC NET Management July 2018

Avatto>>UGC NET Management>>PREVIOUS YEAR SOLVED PAPERS>>UGC NET Management July 2018

23. In case the profitability index of an investment is equal to one (= 1), the net present value of the investment will be:

  • Option : D
  • Explanation : The profitability index is the ratio of the total PV of future cash inflows to the initial investment, that is, PV/I. This index is used as a means of ranking projects in descending order of attractiveness.
    Decision rule: If the profitability index is greater than 1, then accept the project.
Cancel reply
Cancel reply