Which of the following statements are true L Based on the NPV criteria, a project is desirable if its NPV is greater than zero

Finance Dec 23, 2020

Which of the following statements are true L Based on the NPV criteria, a project is desirable if its NPV is greater than zero. 1. Payback Period ignores both the time value of money, and the cash flows beyond the payback period III. Based on the IRRR criteria, a project is desirable if its IRR is higher than firm's required rate of return. III. When comparing two projects, the one with higher profitability will necessarily lead to a higher NPV I and IV I and Ill only Land and only

Expert Solution

Option c is correct

I, II and III are correct

Fourth statement is incorrect, because higher profitability does not need to be necessarily to have higher NPV.

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