If project A has a lower internal rate of return than project B, then project A will have a
A) lower NPV and a shorter payback period.
B) higher NPV and a longer payback period.
C) lower NPV and a longer payback period.
D) higher NPV and a shorter payback period.

Question

Quizplus · Accepted Answer

If project A has a lower internal rate of return than project B, it means that project A's cash flows are generating less returns than project B. This will result in a lower NPV and a longer payback period for project A compared to project B, as it will take longer to recover the initial investment and generate profits. Therefore, option C is the best choice.

If Project a Has a Lower Internal Rate of Return