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In case the profitability index of an investment is equal to one(=1), the net present value of the…

Since Profitability Index is defined as PI = PV of Cash Inflows / Initial Cash Outflow, a PI equal to 1 implies that the Present Value of Cash Inflows is exactly equal to…

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In case the profitability index of an investment is equal to one(=1), the net present value of the investment will be :

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Since Profitability Index is defined as PI = PV of Cash Inflows / Initial Cash Outflow, a PI equal to 1 implies that the Present Value of Cash Inflows is exactly equal to the Initial Cash Outflow. Consequently, Net Present Value (NPV = PV of Inflows - Initial Outflow) is equal to zero (= 0).

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