If a Project Has a Cost of $50,000 and a Profitability

question 75

Multiple Choice

If a project has a cost of $50,000 and a profitability index of 2,then:

• A) it has a negative NPV.
• B) its NPV could be positive or negative depending on the cost of capital.
• C) its cash flow is $100,000.
• D) it has a positive NPV.

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Definitions:

Historical Rate

The exchange rate between two currencies at the time a transaction occurred, used for translating transactions recorded in foreign currencies to the functional currency.

Primary Economic Environment

The main geographical market or economic setting in which an entity operates and generates most of its revenue.

Financing

The process of obtaining capital or funds to operate, expand, or invest, through means such as loans, equity, or bonds.