A Project Should Be Accepted When The

question 31

Multiple Choice

A project should be accepted when the:

• A) Profitability index is less than 1.0.
• B) AAR is less than the targeted AAR.
• C) Net present value is negative.
• D) IRR exceeds the required rate.
• E) Payback period is greater than the prescribed number of years.

---

Definitions:

Time To Maturity

The remaining duration until a financial instrument reaches its fixed expiration or redemption date.

Cash Equivalent

Short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Reconciliation Of Profit

The process of adjusting the profit or loss figures from one accounting period to another to take into account differences caused by transactions, accounting methods, or errors.

Exchange Rates

The rate at which one currency can be exchanged for another, often used in the conversion of financial statements of companies that operate in multiple countries.