You Are Considering a Project with the Following Data Which One of the Following Is Correct Given This Information

question 55

Multiple Choice

You are considering a project with the following data:
$\begin{array} { l l } \text { Internal rate of return: } & 8.7 \% \\ \text { Profitability ratio: } & 0.98 \\ \text { Net present value: } & - £ 393 \\ \text { Payback period: } & 2.44 \text { years } \\ \text { Required return: } & 9.5 \% \end{array}$
Which one of the following is correct given this information?

• A)The discount rate used in computing the net present value must have been less than 8.7%.
• B)The discounted payback period will have to be less than 2.44 years.
• C)The discount rate used to compute the profitability ratio was equal to the internal rate of
• Return.
• D)This project should be accepted based on the profitability ratio.
• E)This project should be rejected based on the internal rate of return.

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