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.