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Describe how the profitability index is calculated

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Question: Profitability Index. Concerning the profitability index:

a. Describe how the profitability index is calculated and describe the information this measure provides about a sequence of cash flows. What is the profitability index decision rule?

b. What is the relationship between the profitability index and the NPV? Are there any situations in which you might prefer one method over the other? Explain.

Reference no: EM131732204

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