A Firm Is Evaluating a Proposal Which Has an Initial

question 57

Multiple Choice

A firm is evaluating a proposal which has an initial investment of $50,000 and has cash flows of $15,000 per year for five years.If the firm's required return or cost of capital is 15%, should it accept the project using the IRR as a decision criteria?

• A)yes
• B)no
• C)can't tell
• D)none of the above

---

Definitions:

Deposit Today

The action of placing money into a financial account with the intention that it starts earning interest or grows in value from today onwards.

Savings

Money set aside for future use that is not currently spent on consumption or expenses.

Correlation Coefficient

A metric that determines the intensity and orientation of a linear connection between two variables.