For a Project with Ordinary Cash Flows (Defined as Negative

question 19

Multiple Choice

For a project with ordinary cash flows (defined as negative initial cash flows followed by positive cash flows) and a positive NPV,which of the following statements is NOT necessarily true?

• A)The internal rate of return will be greater than the required rate of return.
• B)The modified internal rate of return will be greater than the required rate of return.
• C)The payback period will be less than the required amount of time.
• D)All of the statements above must be true.

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Definitions:

Postponement

A strategy used in supply chain management to delay product customization until customer orders are received.

Replenishment Cycle

The process of restocking products or materials in a supply chain, from ordering to receipt and back to order again.

Lead Time

Lead time is the duration between the initiation and completion of a process, often used in reference to the time taken from ordering to receiving goods.

ROP

Refers to Reorder Point, a inventory management technique indicating the minimum level before a new order must be placed.