Deal of The Day! Hurry Up, Grab the Special Discount - Save 25% - Ends In 00:00:00 Coupon code: SAVE25
Welcome to Pass4Success

- Free Preparation Discussions
Mail Us support@pass4success.com
Location US
Mob_nav_barsMENU

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 .

Show Suggested Answer Hide Answer
Suggested Answer: A

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

Limited Time Offer

25%

Off

Get Premium CTFA Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

0/2000 characters
Submit Cancel
Monroe
15 days ago
I think it's about the initial investment.
upvoted 0 times
...
German
20 days ago
I thought it was more complicated than just that!
upvoted 0 times
...
Vanda
26 days ago
Yup, profitability index helps prioritize projects!
upvoted 0 times
...
Angella
1 month ago
Wait, are we sure that's the only factor to consider?
upvoted 0 times
...
Colby
1 month ago
Totally agree, that's a key metric for evaluating projects!
upvoted 0 times
...
Shay
1 month ago
It's the ratio of future cash flows to the initial investment.
upvoted 0 times
...
Kirby
2 months ago
The profitability index is the ratio of the project's future cash inflows to its initial cash outflows. Gotta love those finance formulas!
upvoted 0 times
...
Broderick
2 months ago
Isn't the profitability index just the ratio of the project's benefits to its costs? I'm pretty sure that's what they taught us in class.
upvoted 0 times
...
Margot
2 months ago
The profitability index is the ratio of the project's future cash flows to its initial cost. Simple as that!
upvoted 0 times
...
Aliza
2 months ago
The project's profitability index is the ratio of the present value of its future cash flows to its initial investment.
upvoted 0 times
...
James
2 months ago
I think it’s the initial investment too, but I remember there were some nuances in different scenarios we went over in class.
upvoted 0 times
...
Ceola
2 months ago
I feel like the answer might be the initial investment, but I can't recall if there are any exceptions or specific cases we discussed.
upvoted 0 times
...
Mitsue
3 months ago
I remember practicing a similar question where we had to find the profitability index, and it was definitely about cash flows over costs.
upvoted 0 times
...
Ayesha
3 months ago
I think the profitability index is calculated using future cash flows divided by the initial investment, but I'm not completely sure.
upvoted 0 times
...
Carylon
4 months 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.
upvoted 0 times
...
Amber
4 months 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.
upvoted 0 times
...
Pamella
4 months 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.
upvoted 0 times
...
Lasandra
4 months 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.
upvoted 0 times
...
Serina
4 months 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.
upvoted 0 times
...

Save Cancel