Which of the Following Can Be Deduced About a Three-Year

question 9

Multiple Choice

Which of the following can be deduced about a three-year investment project that has a two-year payback period?

• A)the NPV is positive.
• B)the IRR is greater than the cost of capital.
• C)Both the NPV is positive and the IRR is greater than the cost of capital can be deduced.
• D)Neither the NPV is positive nor the IRR is greater than the cost of capital can be deduced.

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Definitions:

Aircraft Production

The process and industry involved in designing, manufacturing, and assembling aircraft.

Newspaper Printing

The process of mass-producing copies of a newspaper document, whereby the news and other data are printed onto papers.

Economies of Scale

The cost advantage that arises with increased output of a product, where the average cost per unit decreases as the scale of production rises.

Inputs

Resources such as labor, materials, and capital used in the production process to create goods and services.