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Antonio wants to purchase Cleo's PatraRestaurant. Antonioestimates theproject hasan IRR of 16.3 percent, a Profitability Indexof 1.49, an NPV of...
Antonio wants to purchase Cleo's Patra Restaurant. Antonio estimates the project has an IRR of 16.3 percent, a Profitability Index of 1.49, an NPV of $19,387, and a discounted payback period of 3.21 years. Which one of the following statements is likely correct given the project has conventional cash flows?
A) The discount rate used in computing the net present value was less than 3%
B) The firm's required discounted payback period on new project's must be less than 3.21 years
C) The present value of the project's cash inflows must be less than $1.49
D) The discount rate that sets NPV equal to zero must be less than 16.3%
E) The payback period must be more than 3.21 years
