Which of the Following Statements Is True for a Project

question 6

Multiple Choice

Which of the following statements is true for a project with $20,000 initial cost, cash inflows of $5,800 per year for six years, and a discount rate of 15 percent?

• A)its payback period is roughly 3 1/2 years.
• B)its NPV is $2,194.
• C)its IRR is 1.85 percent.
• D)its profitability index is 0.109.

---

Definitions:

Benjamin Graham

Widely recognized as the father of value investing, he was an economist, professional investor, and Columbia Business School professor.

Investment Funds

Pooled funds from investors that are managed on their behalf by an investment manager, investing in a variety of assets to meet specific investment goals.

Income Statement

A financial statement showing a firm’s revenues and expenses during a specified period.

Profitability

A measure of the efficiency and effectiveness of a company's operations, indicated by its ability to generate income from its activities.