Homework Answers
If the discount rate is less than the IRR, then the NPV will be positive.
If the discount rate is equal to the IRR, then the NPV will be zero.
If the discount rate is more than the IRR, then the NPV will be negative.
In the present case, since the NPV is positive, it implies that the discount rate is less than the Internal rate of return.
The payback period represents the time period in which the initial investment of a project is recovered. It implies that the cash flows which occurs after the initial investment is recovered is ignored by this method. Further it does not takes in to consideration the time value of money in to account.
So, the correct answer is option of All of the above are correct.
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