EBK CORPORATE FINANCE
4th Edition
ISBN: 9780134202785
Author: DeMarzo
Publisher: VST
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Chapter 22.7, Problem 1CC
Summary Introduction
To discuss: The profitability index rule of thumb.
Introduction:
Profitability index is a payoff ratio of the investment on a planned project. It is utilized for ranking the projects. The relationship between the
If the profitability index is greater than 1, then NPV is positive.
If the profitability index is less than 1, then NPV is negative.
If a company has many positive NPV projects and is subjected to capital restrictions, then the profitability index might give a fair measure for ranking the projects.
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Chapter 22 Solutions
EBK CORPORATE FINANCE
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