You have been asked to consider a project with the following characteristics: In

Question

You have been asked to consider a project with 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 percent. II. The discounted payback period must be more than 2.98 years. III. The discount rate used in the computation of the profitability ratio was 11.63 percent. IV. This project should be accepted as the internal rate of return exceeds the required return. Select one: 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

Explanation / Answer

C - I, II and IV only

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