You Are Considering a Project with the Following Data: IRR

question 13

Multiple Choice

You are considering a project with the following data: IRR = 8.7 percent;PI = .98;NPV = -$393;Payback period = 2.44 years.Which one of the following statements is correct given this information?

• A)The discount rate used in computing the net present value must have been less than 8.7 percent.
• B)The discounted payback period will have to be less than 2.44 years.
• C)The discount rate used to compute the profitability ratio was equal to the internal rate of return.
• D)This project should be accepted based on the profitability ratio.
• E)The required rate of return must be greater than 8.7 percent.

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Definitions:

Interactional Justice

The degree to which others are treated with dignity and respect.

Policies

Guidelines or rules established by organizations or governments that dictate behaviors or procedures.

Rules

Explicitly stated principles or directives that guide actions and determine acceptable behaviors within a specific context.

Commutative Justice

The degree to which an exchange or a transaction is fair to all parties.