A Project Would Be Acceptable If

question 61

Multiple Choice

A project would be acceptable if

• A) the payback is greater than the discounted equivalent annual annuity.
• B) the equivalent annual annuity is greater than or equal to the firm's discount rate.
• C) the profitability index is greater than the net present value.
• D) the net present value is positive.

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Definitions:

Amortization Schedule

A table detailing each periodic payment on a loan over time, breaking down the amounts going towards principal and interest.

Loan to Value Ratio

A financial term employed by lenders that denotes the ratio between a loan amount and the value of an asset acquired.

Down Payment

An initial payment made when something is bought on credit.

Compounded Quarterly

A method of calculating interest where it is added to the principal amount every three months.