2D2C MOLAR INC. IS EVALUATING THREE INDEPENDENT PROJECTS FOR THE EXPA...
340.
CSO: 2D2c
LOS: 2D2c
Molar Inc. is evaluating three independent projects for the expansion of different product
lines. The Finance Department has performed an extensive analysis of each project and
the chief financial officer has indicated that there is no capital rationing in effect. Which
of the following statements are correct?
I.
Reject any project with a payback period which is shorter than the
company standard.
II.
The project with the highest internal rate of return (IRR) exceeding the
hurdle rate should be selected and the others rejected.
III.
All projects with positive net present values should be selected.
IV.
Molar should reject any projects with negative IRRs.
a.
I, II and IV only.
b.
I, II, III and IV.
c.
II and III only.
d.
III and IV only.