When the Present Value of the Cash Inflows Exceeds the Initial

question 107

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 payback period is less than the required time period. 
• 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 positive. 

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Definitions:

Acre

A unit of land area used in the imperial and US customary systems, equivalent to 4,840 square yards or about 4,047 square meters.

Cubic Meter

A unit of volume in the International System of Units, representing the volume of a cube with edges one meter in length.

Liter

A metric unit of volume equal to one cubic decimeter, commonly used to measure liquids and other volumes in the scientific and commercial worlds.

Snowmelt

The process of snow and ice melting, often contributing to river flow in many parts of the world, and can lead to flooding if rapid.