You Are Considering a Project with Conventional Cash Flows

question 9

Multiple Choice

You are considering a project with conventional cash flows.The IRR is 12.6 percent,NPV is -$198,and the payback period is 2.87 years.Which one of the following statements is correct given this information?

• A)The discount rate used in computing the net present value was less than 12.6 percent.
• B)The discounted payback period will have to be less than 2.87 years.
• C)The project life must be 2.87 years.
• D)This project should be accepted based on the internal rate of return.
• E)The required rate of return must be greater than 12.6 percent.

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Definitions:

Illegal

Activities or actions that are prohibited by law and subject to penalties.

Fort Worth, TX

A city in the U.S. state of Texas, known for its rich history in the cattle ranching industry and vibrant cultural scene.

Stockyards

Designated areas where livestock are held temporarily before being slaughtered, sold, or shipped to another location.

Ranch Hands

Workers responsible for the maintenance and operations of a ranch, including caring for livestock.