Question 10 [5 pts]

Which of the following statements is correct? Choose only one.

a) If a project has a zero net present value (NPV), its internal rate of return (IRR) is equal to its cost of capital.

b) With the discounted payback rule, one can resolve the problem that arises when choosing from mutually-exclusive projects.

c) If a project has an investment cost of $10 million and an NPV of $10 million, its profitability index is equal to 1.

d) The NPV of investing in a bond is positive because the bond price is lower than the sum of cash flows.

e) None of the above.

Answer: