General Studies · Capital Budgeting
The Profitability Index (PI) of a project is 1.25. This indicates that:
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The NPV equals 25% of the cost of capital
- 2The project has negative NPV and should be rejected
- 3For every Re. 1 invested, Rs. 1.25 in present value of cash inflows is generated✓
- 4The project earns a 25% return on capital
Correct answer
For every Re. 1 invested, Rs. 1.25 in present value of cash inflows is generated
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