A project manager wants to invest in a project with an initial cost of $58,500 and cash flows of $32,400 and $38,500 in Years 1 and 2. The manager's employer requires a discount rate of 10 percent and also a return of $1.10 in today's dollars for every $1 invested. Will the project be approved? Why or why not? 1-No; because the project does not meet either requirement. 2-Yes; because both criteria are met. 3-Yes; because the Pl is greater than 1. 4-Yes; because the NPV is positive. 5-No; while the project returns more than 10 percent it does meet the $1.10 per $1 requirement.
A project manager wants to invest in a project with an initial cost of $58,500 and cash flows of $32,400 and $38,500 in Years 1 and 2. The manager's employer requires a discount rate of 10 percent and also a return of $1.10 in today's dollars for every $1 invested. Will the project be approved? Why or why not? 1-No; because the project does not meet either requirement. 2-Yes; because both criteria are met. 3-Yes; because the Pl is greater than 1. 4-Yes; because the NPV is positive. 5-No; while the project returns more than 10 percent it does meet the $1.10 per $1 requirement.
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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Transcribed Image Text:A project manager wants to invest in a project with an initial cost of $58,500 and cash flows of
$32,400 and $38,500 in Years 1 and 2. The manager's employer requires a discount rate of 10
percent and also a return of $1.10 in today's dollars for every $1 invested. Will the project be
approved? Why or why not?
1-No; because the project does not meet either requirement.
2-Yes; because both criteria are met.
3-Yes; because the Pl is greater than 1.
4-Yes; because the NPV is positive.
5-No; while the project returns more than 10 percent it does meet the $1.10 per $1
requirement.
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