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

In the case of mutually exclusive projects, the project with the highest NPV should be chosen, not necessarily the one with the highest IRR.

All of the Following Are Sufficient Indications to Accept a Project