Please explain the answer.Homework Answers
NPV = Present value of cash inflows – Present value of cash outflows
Profitability Index = Present value of Cash inflows/Present value of cash outflows
IRR is the rate at which NPV = 0
Payback period is the time period in which the initial investment in recovered
Since NPV is positive. Profitability Index will be greater than 1
And IRR will be higher than cost of capital
And payback period will be shorter
Hence, the answer is
D)I and III are correct
NPV = Present value of cash inflows – Present value of cash outflows
Profitability Index = Present value of Cash inflows/Present value of cash outflows
IRR is the rate at which NPV = 0
Payback period is the time period in which the initial investment in recovered
Since NPV is positive. Profitability Index will be greater than 1
And IRR will be higher than cost of capital
And payback period will be shorter
Hence, the answer is
D)I and III are correct
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$17,000. It then generates positive future cash flows. The
appropriate discount rate is 22%. This project has an NPV of -$935
(negative NPV). What can you say about this project’s IRR?
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Show all work and highlight final answer. Do not answer the
question unless you answer all of them.
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