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:

Erikson

A psychoanalyst known for his theory on the psychological development of human beings, which outlines eight stages from infancy to adulthood.

Wisdom

The quality of having experience, knowledge, and good judgment.

Dependency

A state in which an individual relies on another for support, sustenance, or decision making.

Erikson

Psychologist Erik Erikson is known for his theory on the psychosocial development of human beings, outlining eight stages from infancy to adulthood.