Which One of the Following Should Be Assumed About a Project

question 13

Multiple Choice

Which one of the following should be assumed about a project that requires a $100,000 investment at time zero,then returns $20,000 annually for 5 years?

• A) The NPV is negative.
• B) The NPV is zero.
• C) The profitability index is 1.0.
• D) The IRR is negative.

---

Definitions:

Ending Inventory

The overall worth of items ready for sale after an accounting period, determined by starting inventory added to purchases and then subtracting the cost of goods sold.

Periodic Inventory System

An inventory accounting system where updates to the quantity and cost of inventory are made at specified intervals, such as monthly or yearly, not continuously.

FIFO Method

FIFO method, or First-In, First-Out, is an inventory costing method where the first items placed into inventory are the first ones sold, used for calculating cost of goods sold and ending inventory.

Cost of Goods Sold

Cost of goods sold is the direct costs attributable to the production of the goods sold by a company, including the cost of materials and labor.