If a project has a cost of $50,000 and a profitability index of 0.4, then:
A) its cash inflows are $70,000.
B) the present value of its cash inflows is $30,000.
C) its IRR is 20%.
D) its NPV is $20,000.
Deals with a question based on concept of profitability index. The solution is explained for better understanding.