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problem: An investment has the following cash flows. Should the project be accepted if it has been assigned a required return of 9.5 percent? Why or why not?

Year

Cash flow

0

($24,000)

1

$8,000

2

$12,000

3

$9,000


[A] yes; because the IRR exceeds the required return by about 0.39 percent
[B] yes; because the IRR is less than the required return by about 3.9 percent
[C] yes; because the IRR is positive
[D] no; because the IRR exceeds the required return by about 3.9 percent
[E] no; because the IRR is 9.89 percent

Basic Finance, Finance

  • Category:- Basic Finance
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