Union Atlantic Corporation, Which Has a Required Rate of Return

Multiple Choice

Union Atlantic Corporation, which has a required rate of return equal to 14 percent, is evaluating a capital budgeting project that requires an initial investment of $170,000. The project will generate a $60,750 cash inflow at the year-end of each of the next four years. According to this information, which of the following statements is correct?

A) The project is acceptable if its internal rate of return (IRR) is less than 14 percent.
B) The project is acceptable if its discounted payback period is greater than its economic life.
C) The project is acceptable because its net present value is positive.
D) The project's is acceptable if its discounted payback period is less than the traditional payback period.
E) The project is not acceptable because its net present value is less than the future value of the cash flows it is expected to generate during its life.