Which of the following is true regarding the project profitability index and the net present value method of evaluating investment opportunities?

Multiple Choice

• Both methods ignore the time value of money.

• The two methods will always result in the same preference ranking for investment projects.

• Projects lasting the same number of periods will have the same preference ranking under the two methods.

• For two projects with same net present value, the project requiring a lower initial investment will have a higher profitability ranking than a project requiring a higher initial investment.