For a project with ordinary cash flows (defined as negative initial cash flows followed by positive cash flows)and a positive NPV,which of the following statements is NOT necessarily true?

Question

Quizplus · Accepted Answer

A project with a positive Net Present Value (NPV) indicates that its returns exceed the cost of capital (or the required rate of return), which directly implies that the Internal Rate of Return (IRR) and Modified Internal Rate of Return (MIRR) are greater than the required rate of return, as both are methods to evaluate the profitability of investments. However, a positive NPV does not guarantee a short payback period; the payback period could still be longer than the required or expected timeframe, as it simply measures how long it takes to recoup the initial investment, without considering the value of money over time or returns beyond the payback period.

For a Project with Ordinary Cash Flows (Defined as Negative