CORRECT ANSWER C. THE PROFITABILITY INDEX IS THE RATIO OF THE P...

348.

Correct answer c. The profitability index is the ratio of the present value of a project’s future

cash flows to the project’s initial cash outflow. A profitability index greater than 1.00 implies

that the project’s present value is greater than its initial cash outflow which, in turn, implies

that the net present value is greater than zero.