Year 0 Year 1 Year 2 Year 3 Year 4 Project CF CF CF CF OF Cost of capital A -100 140 50 B -73 30 30 130 88 60 10 15% 30 15% Which of the following statements is correct? Accept project A since its IRR > 15% O Reject project B since its NPV > 0 O Accept project A since its NPV < 0 O Accept project B since its IRR < 15%

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
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Year 0 Year 1 Year 2 Year 3 Year 4
Project CF
CF
CF
CF
OF
Cost of capital
A
-100 140
50
B
-73
30
30
130
88
60
10
15%
30
15%
Which of the following statements is correct?
Accept project A since its IRR > 15%
O Reject project B since its NPV > 0
O Accept project A since its NPV < 0
O Accept project B since its IRR < 15%
Transcribed Image Text:Year 0 Year 1 Year 2 Year 3 Year 4 Project CF CF CF CF OF Cost of capital A -100 140 50 B -73 30 30 130 88 60 10 15% 30 15% Which of the following statements is correct? Accept project A since its IRR > 15% O Reject project B since its NPV > 0 O Accept project A since its NPV < 0 O Accept project B since its IRR < 15%
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