Which one of the following is an indicator that an investment is acceptable? Check all that apply: Profitability index equal 1.5 Profitability index greater than 0 the required return less than internal rate of return IRR equal to zero Payback period exceeds the required period Profitability index equal 1

Which one of the following is an indicator that an investment is acceptable? Check all that apply: Profitability index equal 1.5 Profitability index greater than 0 the required return less than internal rate of return IRR equal to zero Payback period exceeds the required period Profitability index equal 1

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 12MC: Which of the following does nor assign a value to a business opportunity using time-value...

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The internal rate of return equals the rate that yields a profitability index of 1 for an investment. True O False
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Required information Problem 24-2A (Algo) Payback period, accounting rate of return, net present value, and net cash flow calculation LO P1, P2, P3 [The following information applies to the questions displayed below.] Project Y requires a $306,000 investment for new machinery with a six-year life and no salvage value. The project yields the following annual results. Cash flows occur evenly within each year. (PV of $1, FV of $1, PVA of $1, and FVA of $1) (Use appropriate factor(s) from the tables provided.) Annual Amounts Sales of new product Expenses Materials, labor, and overhead (except depreciation) Depreciation-Machinery Selling, general, and administrative expenses Income Project Y $ 370,000 165,760 51,000 26,000 $ 127,240
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Define each of the following terms: c. Net present value (NPV) method; internal rate of return (IRR) method;profitability index (PI)