LBM Corporation is evaluating a capital budgeting project that costs $2 million and has useful...
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Finance
LBM Corporation is evaluating a capital budgeting project that costs $2 million and has useful life equal to eight (8) years. The evaluation indicates that the project's discounted payback period, DPB, is 8.5 years. Based on this information, which of the following is correct?
a. The project should be purchased
b. The project's internal rate of return (IRR) is less than LBM's required rate of return (r); that is, IRR < r
c. The project's net present value (NPV) is positive; that is, NPV > 0
d. The project's traditional payback period, PB, is greater than 8.5 years; that is, PB > 8.5 years
e. The present value of the future cash flows (i.e., cash flows in Years 1 - 8) that the project is expected to generate is greater than $2 million
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