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Finance Assignment | Top Essay Writing

Which one of the following statements is not true regarding the profitability index (PI)?

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(1) The PI expresses the present value of an investment as a ratio of the initial investment

(2) If the present value of future cash flows is less than the initial investment, then the PI will be less than 1.

(3) The PI quantifies how much a project is expected to earn for every Rl invested in the project.

(4) A negative value for Pl is indicative of an unprofitable investment.

(5) A lower discount rate will result in an increase in the PI of a project. Get Finance homework help today

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