Which of the following should be assumed about a project that requires a $100,000 investment at time-period zero, then returns $20,000 annually for five years?
A)the NPV is negative
B)the NPV is zero
C)the profitability index is 1.0
D)the IRR is negative

Question

Quizplus · Accepted Answer

The NPV is likely negative because the sum of the present values of the annual returns ($20,000 for five years) is unlikely to exceed the initial investment of $100,000, especially when considering the time value of money and a positive discount rate.

Which of the Following Should Be Assumed About a Project