If the Internal Rate of Return on a Project Is

question 234

True/False

If the internal rate of return on a project is 11.24%, and the project is assigned a 9.5% discount rate,
then the profitability index will be greater than 1.0.

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Definitions:

Face Value

The nominal or dollar value printed on a stock, bond, or other financial instrument, representing its legal value.

Maturity

The date on which the principal amount of a financial instrument, such as a bond or loan, is to be paid back in full.

Current Yield

The annual income (interest or dividends) divided by the current price of the security, often used to compare the return on investment of different securities.

Par Value

The nominal or face value of a bond, share of stock, or other financial instrument.