You Are Considering a Project with the Following Data: Internal

question 105

Multiple Choice

You are considering a project with the following data: Internal rate of return 8.7%
Profitability ratio .98
Net present value -$393
Payback period 2.44 years
Required return 9.5%
Which one of the following is correct given this information?

• A) The discount rate used in computing the net present value must have been less than 8.7%.
• B) The discounted payback period will have to be less than 2.44 years.
• C) The discount rate used to compute the profitability ratio was equal to the internal rate of return.
• D) This project should be accepted based on the profitability ratio.
• E) This project should be rejected based on the internal rate of return.

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Definitions:

Himalaya

A major mountain range in Asia, forming a barrier between the Plateau of Tibet to the north and the alluvial plains of the Indian subcontinent to the south.

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The rigid outer layer of the Earth, comprising the crust and the upper mantle, which is involved in tectonic processes like plate movements.

Earth's Peak

Geological high points on Earth's surface, such as mountains or hills, formed by various geological processes including tectonic movements and erosion.

Deformation

The process by which rocks change shape or position due to stress, heat, or pressure without breaking.