All of the following are sufficient indications to accept a project EXCEPT (assume that there is no capital rationing constraint,and no consideration is given to payback as a decision tool)
A) the net present value of an independent project is positive.
B) the profitability index of an independent project exceeds one.
C) the IRR of a mutually exclusive project exceeds the required rate of return.
D) the NPV of a mutually exclusive project is positive and exceeds that of all other projects.

Question

Quizplus · Accepted Answer

C) is incorrect because it specifies a condition for a mutually exclusive project, where the IRR exceeding the required rate of return is not a sufficient condition to accept a project if there are other projects with higher NPVs.

All of the Following Are Sufficient Indications to Accept a Project