When the Present Value of the Cash Inflows Exceeds the Initial

question 306

Multiple Choice

When the present value of the cash inflows exceeds the initial cost of a project, then the project should be:

• A) Accepted because the internal rate of return is positive.
• B) Accepted because the profitability index is greater than 1.
• C) Accepted because the profitability index is negative.
• D) Rejected because the internal rate of return is negative.
• E) Rejected because the net present value is negative.

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