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American Bankers Association CTFA Exam - Topic 3 Question 99 Discussion

Actual exam question for American Bankers Association's CTFA exam
Question #: 99
Topic #: 3
[All CTFA Questions]

A project's profitability index is equal to the ratio of the of a project's future cash flows to the project's .

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by Annelle at Jan 23, 2026, 08:32 PM

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Mitsue
5 days ago
I remember practicing a similar question where we had to find the profitability index, and it was definitely about cash flows over costs.
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Ayesha
10 days ago
I think the profitability index is calculated using future cash flows divided by the initial investment, but I'm not completely sure.
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Carylon
15 days ago
Alright, I've got this. Profitability index is a useful metric for evaluating project viability. I'll focus on identifying the cash flows and initial investment, then do the ratio calculation. Should be straightforward if I remember the formula.
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Amber
20 days ago
Wait, what's the difference between profitability index and net present value again? I'm getting a bit mixed up on these capital budgeting concepts. Gotta make sure I have them straight.
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Pamella
25 days ago
Profitability index is the ratio of the present value of a project's future cash flows to the project's initial investment, right? I think I can work through this, just need to make sure I set up the calculation correctly.
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Lasandra
1 month ago
Hmm, profitability index... I remember learning about that in my finance class, but I'm a little fuzzy on the details. I'll need to review my notes to refresh my memory.
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Serina
1 month ago
Okay, this looks like a question on capital budgeting. I'll need to think through the definition of profitability index and make sure I understand the components.
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