You would like to invest in the following project. Victoria, your boss, insists that only projects that can return at least $1.10 in today's dollars for every $1 invested can be accepted. She also insists on applying a 10 % discount rate to all cash flows. Based on these criteria, you should:
A) Accept the project because it returns almost $1.22 for every $1 invested.
B) Accept the project because it has a positive PI.
C) Accept the project because the NPV is $2,851.
D) Reject the project because the PI is 1.05.
E) Reject the project because the IRR exceeds 10 %.

Question

You would like to invest in the following project.  Victoria, your boss, insists that only projects that can return at least $1.10 in today's dollars for every $1 invested can be accepted. She also insists on applying a 10 % discount rate to all cash flows. Based on these criteria, you should:
A) Accept the project because it returns almost $1.22 for every $1 invested. 
B) Accept the project because it has a positive PI. 
C) Accept the project because the NPV is $2,851. 
D) Reject the project because the PI is 1.05. 
E) Reject the project because the IRR exceeds 10 %.

Quizplus · Accepted Answer

The Answer of You would like to invest in the following project.  Victoria, your boss, insists that only projects that can return at least $1.10 in today's dollars for every $1 invested can be accepted. She also insists on applying a 10 % discount rate to all cash flows. Based on these criteria, you should:
A) Accept the project because it returns almost $1.22 for every $1 invested. 
B) Accept the project because it has a positive PI. 
C) Accept the project because the NPV is $2,851. 
D) Reject the project because the PI is 1.05. 
E) Reject the project because the IRR exceeds 10 %.

You Would Like to Invest in the Following Project