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.

---

Definitions:

Total Assets

The aggregate of all financial resources owned by a company, including current and non-current assets, which reflects its total economic value.

Statement Of Income

A financial document showing a company's revenue, expenses, and profits over a specific period, also known as an income statement.

Retained Earnings

The portion of net income left over for a company after it has paid out dividends to its shareholders.

Specific Period

A specific period in accounting refers to a set time frame for which financial statements are prepared or to which particular financial transactions or events pertain.