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A firm with a cost of capital of 15% is evaluating two independent projects utilizing the internal rate of return technique. Project X has an initial investment of $80,000 and cash inflows at the end of each of the next five years of $25,000. Project Z has an initial investment of $120,000 and cash inflows at the end of each of the next four years of $40,000. The firm should ________. Select one: a. accept both the projects because they have equal IRR b. accept Project X and reject project Z c. reject both the projects because they have negative IRR d. accept Project Z because its IRR is higher than Project X

A firm with a cost of capital of 15% is evaluating two independent projects utilizing the internal rate of return technique. Project X has an initial investment of $80,000 and cash inflows at the end of each of the next five years of $25,000. Project Z has an initial investment of $120,000 and cash inflows at the end of each of the next four years of $40,000. The firm should ________. Select one: a. accept both the projects because they have equal IRR b. accept Project X and reject project Z c. reject both the projects because they have negative IRR d. accept Project Z because its IRR is higher than Project X

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
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A firm with a cost of capital of 15% is evaluating two independent projects utilizing the internal rate of return technique. Project X has an initial investment of $80,000 and cash inflows at the end of each of the next five years of $25,000. Project Z has an initial investment of $120,000 and cash inflows at the end of each of the next four years of $40,000. The firm should ________.

Select one:
a. accept both the projects because they have equal IRR
b. accept Project X and reject project Z
c. reject both the projects because they have negative IRR
d. accept Project Z because its IRR is higher than Project X
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