If a Project with Conventional Cash Flows Has a Profitability

question 3

Multiple Choice

If a project with conventional cash flows has a profitability index of 1.0, the project will:

• A)never pay back.
• B)have a negative net present value.
• C)have a negative internal rate of return.
• D)produce more cash inflows than outflows in today's dollars.
• E)have an internal rate of return that equals the required return.

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Definitions:

Final Distribution

The process of allocating the remaining assets or earnings of a company, fund, or estate to the entitled recipients after all obligations have been met.

Hybrid Form

A blending of two or more different structures or types, often referring to a mix of elements in business, legal, or organizational forms.

Limited Liability Partnership

A partnership arrangement that limits the liability of its partners to their contributions to the business, protecting personal assets.

"S" Corporation

A type of corporation in the United States that meets specific Internal Revenue Code requirements, allowing profits to be taxed only at the shareholder level, not at the corporate level.