You Are Considering a Project with Conventional Cash Flows, an IRR

question 103

Multiple Choice

You are considering a project with conventional cash flows, an IRR of 11.63 percent, a PI of 1.04, an NPV of $987, and a payback period of 2.98 years. Which one of the following statements is correct given this information?

• A) The discounted payback period must be greater than 2.98 years.
• B) The break-even discount rate must be less than 11.63 percent.
• C) The discount rate used in computing the net present value was less than 11.63 percent.
• D) The AAR is equal to the IRR/PI.
• E) The project should be rejected based on its PI value.

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