We compute the profitability index of a capital-budgeting proposal by: - 3703

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We compute the profitability index of a capital-budgeting proposal by: 

A. 

dividing the present value of the annual after-tax cash flows by the cost of capital.

B. 

dividing the present value of the annual after-tax cash flows by the cost of the project.

C. 

multiplying the IRR by the cost of capital.

D. 

multiplying the cash inflow by the IRR.

 
Solution Description

28) We compute the profitability index of a capital-budgeting proposal by: