If the Profitability Index for a Project Exceeds 1,then the Project's

question 15

Multiple Choice

If the profitability index for a project exceeds 1,then the project's

• A)net present value is positive.
• B)internal rate of return is less than the project's discount rate.
• C)payback period is less than 5 years.
• D)accounting rate of return is greater than the project's internal rate of return.

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Definitions:

Commercial Paper

Commercial Paper is an unsecured, short-term debt instrument issued by corporations, typically for the financing of operating expenses and meeting short-term liabilities.

Maturity

The date when a financial instrument (like a bond) expires and the principal is to be paid back to creditors.

Annual Interest Rate

The percentage increase in money lent or invested over a one-year period, expressed as a percentage of the principal.

Cash Conversion Cycle

A metric that measures the time between when a company pays for its inventory and when it receives cash from selling it.