27. Which of the following statements is correct?

- A
If the NPV of a project is greater than 0, its PI will equal 0.

- B
If the IRR of a project is 0%, its NPV, using a discount rate, k, greater than 0, will be 0.

- C
If the PI of a project is less than 1, its NPV should be less than 0.

- D
If the IRR of a project is greater than the discount rate, k, its PI will be less than 1 and its NPV will be greater than 0.

- Option : C
- Explanation :

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- A
calculate the IRR of this investment to be certain that the IRR is greater than the cost of capital.

- B
compare the profitability index of the investment to those of other possible investments.

- C
calculate the payback period to make certain that the initial cash outlay can be recovered within an appropriate period of time.

- D
accept the proposal, since the acceptance of value-creating investments should increase shareholder wealth.

- Option : D
- Explanation :

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30. The Present values of total cash inflows should be compared with the Present value of

- Option : B
- Explanation :

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