Question

If a capital expenditure project has a Profitability Index (P

  • I of exactly 1.00, which of the following statements must be true?
A The Internal Rate of Return (IRR) is higher than the discount rate.
B The Net Present Value (NPV) of the project is zero ($\text{NPV} = 0$).
C The total undiscounted cash inflows equal half of the initial cash outlay.
D The project pays back its initial investment in less than one year.
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