You Are Considering a Project with Conventional Cash Flows and the Following

question 102

Multiple Choice

You are considering a project with conventional cash flows and the following characteristics: $$\begin{array} { l l } \text { Internal rate of return } & 11.63 \text { percent } \\\text { Profitability ratio } & 1.04 \\\text { Net present value } & \$ 987 \\\text { Payback period } & 2.98 \text { years }\end{array}$$ Which of the following statements is correct given this information?
I.The discount rate used in computing the net present value was less than 11.63 percent.
II.The discounted payback period must be more than 2.98 years.
III.The discount rate used in the computation of the profitability ratio was 11.63 percent.
IV.This project should be accepted as the internal rate of return exceeds the required return.

• A)I and II only
• B)III and IV only
• C)I, II, and IV only
• D)II, III, and IV only
• E)I, II, III, and IV

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Definitions:

Early Examples

This term generally refers to the first instances or cases of something, often used to illustrate the origins or primitive forms of concepts, objects, practices, or ideas.

Guan Yu

A renowned general serving under the warlord Liu Bei in the late Eastern Han dynasty of China, later deified as a god of war and loyalty.

Pang De

A historical figure from the Three Kingdoms period of China, renowned for his bravery and loyalty as a military general.

Miniaturizes Landscape

The artistic practice of creating a small-scale representation of a landscape in a highly detailed manner, often found in painting, sculpture, and garden design.