If a Project with Conventional Cash Flows Has a Profitability

question 174

Multiple Choice

If a project with conventional cash flows has a profitability index less than one, then:

• A) The IRR is greater than the required return.
• B) The discounted payback period is greater than the project's life.
• C) The AAR is greater than the required return.
• D) The payback period is less than the maximum acceptable period.
• E) The NPV is positive.

---

Definitions:

Annual Mortality Rate

The proportion of individuals in a population who die within a one-year period, often expressed per 1,000 or 100,000 persons.

Medical Technology

The application of scientific research and equipment to improve the diagnosis, treatment, and prevention of diseases and health conditions.

Present Discounted Value

The value of a future amount of money in today's terms, discounted by a specific interest rate to account for the time value of money.

Lost Wages

Earnings that an employee does not receive due to being unable to work, often due to illness, injury, or other disruptions.