Question
The profitability index will be bigger than one for a
(negative/positive) NPV investment and less than one for a
(negative/positive) NPV investment.
(negative/positive) NPV investment and less than one for a
(negative/positive) NPV investment.
Answers
GPT-4o mini
The profitability index will be bigger than one for a **positive** NPV investment and less than one for a **negative** NPV investment.
A profitability index (PI) greater than 1 indicates that the present value of future cash flows exceeds the initial investment, which corresponds to a positive NPV. Conversely, a PI less than 1 indicates that the present value of future cash flows is less than the initial investment, resulting in a negative NPV.
A profitability index (PI) greater than 1 indicates that the present value of future cash flows exceeds the initial investment, which corresponds to a positive NPV. Conversely, a PI less than 1 indicates that the present value of future cash flows is less than the initial investment, resulting in a negative NPV.