Question

you were recently hired by a firm as a project analyst. the owner of the firm is unfamiliar with financial analysis and wants to know only what the expected dollar return is per dollar spent on a given project. which financial method of analysis will provide the information that the owner requests? multiple choice modified internal rate of return payback profitability index internal rate of return net present value

Answer 1

Profitability index can be handy for a project analyst if the owner of a business doesn't understand financial analysis and only needs to know the expected dollar return per dollar invested on a specific project. Thus, the answer is the third option which is "profitability index".

Profitability index is also known as the "benefit-cost ratio" and the best financial method of analysis that can provide information to the owner's requests. It can be solved by Present Value of Cash Inflows divided by the Present Value of Cash Outflows. If the Profitability Index is greater than 1 then it means the project is good and definitely worth accepting.

Modified IRR or Modified Internal Rate of Return, Payback, IRR or Internal Rate of Return and NPV or Net Present Value can be too complex for the owner of the firm who is unfamiliar with financial analysis.

Learn more about the three of the most common tools of financial analysis: brainly.com/question/14234253

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