Which one of the following indicates an accept decision for an independent project with conventional cash flows?
A) PI greater than 1.0
B) AAR lower than the required rate
C) Payback period that exceeds the requirement
D) Required discount rate greater than the IRR
E) Discounted payback period less than the payback period

Question

Quizplus · Accepted Answer

A PI (profitability index) greater than 1.0 indicates that the project will generate more cash inflows than outflows, and will provide a return on investment. Therefore, an accept decision can be made for the project, assuming there are no other factors that would cause the project to be rejected.

Which One of the Following Indicates an Accept Decision for an Independent