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Category: Business and Finance Homework
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Experience:  Working towards my MBA degree in Finance (Completed the Foundation Classes with a GPA 4.0)
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You Are Considering A Project With Conventional Cash Flows

Resolved Question:

You are considering a project with conventional cash flows and the following characteristics. Internal rate of return (11.63%): Profitability ratio (1.04): Net present value ($987): Payback period (2.98 years): Which of the following statements is correct given this information?
I. The discount rate used in computing the net present value was less than 11.63%.
II. The discounted payback period must be less than 2.98 years.
III. The discount rate used in the computation of profitability ratio was 11.63%.
IV. This project should be accepted as the internal rate of return exceeds the required return.
A. I and II only.
B. III and IV only.
C. I, II, and IV only.
D. II, III, and IV only.
E. I, II, III, and IV.
Submitted: 7 years ago.
Category: Business and Finance Homework
Expert:  BusinessTutor replied 7 years ago.


The correct answer is:

C. I, II, and IV only

Thank you

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