- CFA Exams
- CFA Exam: Level I 2021
- Study Session 10. Corporate Finance (1)
- Reading 32. Capital Budgeting
- Subject 3. Investment Decision Criteria
CFA Practice Question
Financial managers should accept any projects with a profitability index ______.
B. > 1
C. <= cost of capital for the company
A. > 0
B. > 1
C. <= cost of capital for the company
Correct Answer: B
User Contributed Comments 3
| User | Comment |
|---|---|
| Kiniry | Assuming that they are independent projects. |
| khalifa92 | i dont understand why is this applicable some projects might have PI between 0 and 1 but be profitable. |
| Konstantis | if between 0 a and 1 then PV of future cf less than initial investment |