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:

Proprietary Fund

A type of governmental accounting fund used to account for activities that are similar to those found in the private sector, where the intent is to recover costs through user charges.

Financial Statement

Documented records summarizing a business's financial condition and operations over a period.

Statement of Net Position

A financial statement detailing an entity's assets, liabilities, and net position at a particular point in time, providing a snapshot of financial health.

Tax Abatement

A reduction or elimination of taxes granted by governments to encourage certain activities, such as investments in property development.