Which one of the following statements would generally be considered as accurate given independent projects with conventional cash flows?
A) The internal rate of return decision may contradict the net present value decision.
B) Business practice dictates that independent projects should have three distinct accept indicators before a project is actually implemented.
C) The payback decision rule could override the net present value decision rule should cash availability be limited.
D) The profitability index rule cannot be applied in this situation.
E) The projects cannot be accepted unless the average accounting return decision ruling is positive.

Question

Which one of the following statements would generally be considered as accurate given independent projects with conventional cash flows?
A) The internal rate of return decision may contradict the net present value decision. 
B) Business practice dictates that independent projects should have three distinct accept indicators before a project is actually implemented. 
C) The payback decision rule could override the net present value decision rule should cash availability be limited. 
D) The profitability index rule cannot be applied in this situation. 
E) The projects cannot be accepted unless the average accounting return decision ruling is positive.

Quizplus · Accepted Answer

The payback decision rule might be used over the NPV rule if a company has limited cash and needs to recover its investment quickly.

Which One of the Following Statements Would Generally Be Considered