If a Project with Conventional Cash flOws Has a Profitability

question 180

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.

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Definitions:

Equity

In finance, equity represents the ownership interest in a company or property, often measured as the difference between the value of the assets and the liabilities.

Efficiency

The optimal use of resources to achieve the desired outcomes with minimal waste of time, effort, or materials.

Government

A system or group of people governing an organized community, often a state.

Worker's Paradise

An idealized society in which workers are well-compensated, have excellent working conditions, and possess significant rights and benefits.