Shirley Shea has evaluated an investment proposal and found that its payback period is one year, it

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Shirley Shea has evaluated an investment proposal and found that its payback period is one year, it has a negative NPV, and it has a positive IRR. Is this combination of results possible?

A. Yes.

B. No, because a project with a positive IRR has a positive NPV.

C. No, because a project with such a rapid payback period has a positive NPV.

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Corporate Finance A Practical Approach

ISBN: 9781118217290

2nd Edition

Authors: Michelle R Clayman, Martin S Fridson, George H Troughton, Matthew Scanlan

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Question Posted: Mar 29, 2024 12:00 AM

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Shirley Shea has evaluated an investment proposal and found that its payback period is one year, it

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The correct answer is B No because a project with a positive IRR has a positive NPV The combination ...View the full answer

Corporate Finance A Practical Approach

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