Which of the Following Statements Is True for a Project

question 62

Multiple Choice

Which of the following statements is true for a project with a $20,000 initial cost, cash inflows of $5,800 per year for 6 years, and a discount rate of 15%?

• A) Its payback period is 3.45 years.
• B) Its NPV is $2,094.
• C) Its IRR is 17.85%.
• D)Its profitability index is 0.104.

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Definitions:

APC

Average Propensity to Consume, which is the fraction of income that a person or economy spends rather than saving.

APS

The Average Propensity to Save, which is the proportion of total income that households plan to save rather than spend on consumption.

APS

Usually refers to Average Propensity to Save, an economic term that denotes the proportion of income that a person or population saves rather than spends on consumption.

Interest Rates

The percentage of a loan charged as interest to the borrower, typically expressed as an annual percentage rate.