Which one of the following statements is correct? Assume cash flows are conventional.
A)If the IRR exceeds the required return, the profitability index will be less than 1.0.
B)The profitability index will be greater than 1.0 when the net present value is negative.
C)When the internal rate of return is greater than the required return, the net present value is positive.
D)Projects with conventional cash flows have multiple internal rates of return.
E)If two projects are mutually exclusive, you should select the project with the shortest payback period.

Question

Quizplus · Accepted Answer

When the internal rate of return (IRR) is greater than the required return, it indicates that the project's return exceeds the cost of capital, resulting in a positive net present value (NPV).

Which One of the Following Statements Is Correct? Assume Cash