Refer to the Table Below,which Shows the Results of Payback,net

question 22

Multiple Choice

Refer to the table below,which shows the results of payback,net present value,and internal rate of return analysis of four projects.Which is preferred by the internal rate of return criterion?
$$\begin{array} { | l | c | c | c | c | } \hline& \text { A } & \text { B } & \text { C } & \text { D } \\\hline \text { Payback } & 3 & 5 & 8 & 5 \\\hline \text { NPV } & \$ 67.95 & \$ 200.96 & \$ 256.78 & \$ 669.85 \\\hline \text { IRR } & 12.59 \% & 11.81 \% & 10.93 \% & 11.81 \% \\\hline\end{array}$$

• A)Project A
• B)Project B
• C)Project C
• D)Project D

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Definitions:

Fair Value

A measure of the estimated price at which an asset could be bought or sold or a liability settled, under current market conditions.

Passive Investments

Investments in which the investor does not actively manage or influence the operation of the asset, such as stocks or mutual funds.

Equity Securities

Financial instruments representing ownership interest in a company, such as stocks, which can yield dividends and capital gains.

Goodwill

An accounting value assigned to the reputation, customer loyalty, or other factors enabling a business to earn higher profits than expected from its assets alone.