Question

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

Answer 1

A project's profitability index of.85 indicates that: (Hint: Apply the IRR formula: ICO = discounted cash flows with a desired IRR of 8%.) $16,775.

What exactly is a traditional project?

Standard project. a project that will likely experience one or more future positive cash flows after experiencing a negative initial cash flow ( conventional cash inflows)

What is a non-standard project?

It was first used to refer to "non-conventional" projects or "projects having non-conventional cash flows." The internal rate of return (IRR), which was demonstrated to have different values or not exist at all in some projects, was introduced into economic literature after that. If a project just involves one cash change, it is deemed conventional.

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