If Project a Has a Lower Internal Rate of Return

question 5

Multiple Choice

If project A has a lower internal rate of return than project B, then project A will have a

• A) lower NPV and a shorter payback period.
• B) higher NPV and a longer payback period.
• C) lower NPV and a longer payback period.
• D) higher NPV and a shorter payback period.

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Definitions:

Sample Proportion

The fraction of the sample that represents a particular outcome or attribute.

Test Statistic

A measurement derived from sampled data in a hypothesis test, employed to decide if the null hypothesis should be dismissed.

P-Value

The probability of observing a test statistic as extreme as, or more than, what was actually observed, assuming that the null hypothesis is true.

Null Hypothesis

A hypothesis that proposes no statistical significance between the two studied groups, assuming that any observed difference is due to sampling or experimental error.