A Project Has a Discounted Payback Period That Is Equal

question 74

Multiple Choice

A project has a discounted payback period that is equal to the required payback period. Given this, the project: 

• A) will not be acceptable under the payback rule. 
• B) must have a profitability index that is equal to or greater than 1.0. 
• C) must have a zero net present value. 
• D) must have an internal rate of return equal to the required return. 
• E) will still be acceptable if the discount rate is increased.  

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Definitions:

Income Statement

An Income Statement is a financial report that summarizes revenues, expenses, and profits/losses over a specific time period, showing the company's financial performance.

Sold At Discount

A transaction where goods or securities are sold for a price lower than their nominal or face value.

Market Rate

The interest rate prevailing in the market for securities or loans, representing the cost of borrowing or the return on investment.

Interest

The charge for borrowing money or the return on invested capital.