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16. You are evaluating the following project: Year Cash Flow 0 -$1,000 1 $2,420 2 -$1,456 Suppose the cost of capital is 20%. Which of the following statements are accurate about making the investment decision? 1. Since the NPV is positive (=$5.56), you should accept the project. II. Since the IRR (=12%) is less than the cost of capital, you should reject the project. III. There are two solutions to the IRR for this project. O I, II and III OI and III OI and II O Only I

16. You are evaluating the following project: Year Cash Flow 0 -$1,000 1 $2,420 2 -$1,456 Suppose the cost of capital is 20%. Which of the following statements are accurate about making the investment decision? 1. Since the NPV is positive (=$5.56), you should accept the project. II. Since the IRR (=12%) is less than the cost of capital, you should reject the project. III. There are two solutions to the IRR for this project. O I, II and III OI and III OI and II O Only I

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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16. You are evaluating the following project: Year Cash Flow 0 -$1,000 1 $2,420 2 -$1,456 Suppose the cost of capital is 20%. Which of the following statements are accurate about making the investment decision? 1. Since the NPV is positive (=$5.56), you should accept the project. II. Since the IRR (=12%) is less than the cost of capital, you should reject the project. III. There are two solutions to the IRR for this project. O I, II and III OI and III OI and II O Only I
Transcribed Image Text:16. You are evaluating the following project: Year Cash Flow 0 -$1,000 1 $2,420 2 -$1,456 Suppose the cost of capital is 20%. Which of the following statements are accurate about making the investment decision? 1. Since the NPV is positive (=$5.56), you should accept the project. II. Since the IRR (=12%) is less than the cost of capital, you should reject the project. III. There are two solutions to the IRR for this project. O I, II and III OI and III OI and II O Only I
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