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The present value index is computed as ________. total present value of net cash flow divided by amount to be invested cost divided by amount to be invested total future value of net cash flows divided
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41 votes
41 votes
The present value index is computed as ________. total present value of net cash flow divided by amount to be invested cost divided by amount to be invested total future value of net cash flows divided by amount to be invested None of these choices are correct.

User Stefan Church
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1 Answer

18 votes
18 votes

Answer:

total present value of net cash flow divided by amount to be invested

Step-by-step explanation:

The formula to determine the present value index is given below:

Present value index is

= Total present value of net cash flow รท initial investment

It is the method that should be applied for an investment decision for capital rationing

So, the first option is correct

User Nazareno Lorenzo
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2.9k points
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