A Project Has a Required Return of 15% and a Five

question 356

Multiple Choice

A project has a required return of 15% and a five year life. Which of the following is inconsistent with the other four?

• A) The discounted payback is five years
• B) PI = 0
• C) NPV = $0
• D) IRR = 15%
• E) The present value of the future cash flows equals the initial outlay

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Definitions:

Bonds

Debt securities issued by entities such as corporations or governments to raise funds, which obligate the issuer to pay back the principal amount with interest by a specified date.

Cash Received

The amount of money that a business or individual has obtained from various sources, including transactions, investments, or financing.

Issued

Pertains to shares of a corporation that have been allocated to and are held by shareholders.

Straight-Line Amortization

Straight-line amortization is a method of gradually reducing the book value of an intangible asset over a fixed period of its useful life.