Which one of the following is an indicator that an investment is acceptable?
A)Modified internal rate of return equal to zero
B)Profitability index of zero
C)Internal rate of return that exceeds the required return
D)Payback period that exceeds the required period
E)Negative average accounting return

Question

Quizplus · Accepted Answer

An internal rate of return that exceeds the required return indicates that the investment is acceptable as it generates a return greater than the cost of capital. A profitability index of greater than one also indicates the investment is acceptable, but none of the answer choices provide a profitability index greater than one. The other options (A, D, E) are indicators that the investment is not acceptable.

Which One of the Following Is an Indicator That an Investment