A firm is considering a project with the following cash flows: Time 0 = -$20,000, Years 1-5 = $4,500. Should the project be accepted if the cost of capital is 5%? A. No; The IRR of the project is 12.5%. B. Yes; The IRR of the project is 12.5%. C. Yes; The IRR of the project is 4.06%. D. No; The IRR of the project is 4.06%.
A firm is considering a project with the following cash flows: Time 0 = -$20,000, Years 1-5 = $4,500. Should the project be accepted if the cost of capital is 5%? A. No; The IRR of the project is 12.5%. B. Yes; The IRR of the project is 12.5%. C. Yes; The IRR of the project is 4.06%. D. No; The IRR of the project is 4.06%.
Chapter11: Capital Budgeting And Risk
Section: Chapter Questions
Problem 14P
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A firm is considering a project with the following cash flows: Time 0 = -$20,000, Years 1-5 = $4,500. Should the project be accepted if the cost of capital is 5%?
A. No; The
IRR of the project is 12.5%.B. Yes; The IRR of the project is 12.5%.
C. Yes; The IRR of the project is 4.06%.
D. No; The IRR of the project is 4.06%.
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