A Project Has an Initial Cost of $51,900 and Cash

question 59

Multiple Choice

A project has an initial cost of $51,900 and cash flows of $18,700,$56,500,and -$9,100 for Years 1 to 3,respectively.If the required rate of return for this investment is 17 percent,should you accept it based solely on the internal rate of return rule? Why or why not?

• A)Yes,because the IRR exceeds the required return.
• B)Yes,because the IRR is a positive rate of return.
• C)You cannot apply the IRR rule in this case because there are multiple IRRs.
• D)No,because the IRR is a negative rate of return.
• E)No,because the IRR is less than the required return.

---

Definitions:

Convenience Sampling

A non-probability sampling method where participants are selected based on their availability and proximity to the researcher.

Judgment Sampling

A sampling method where the samples are selected based on the opinion of an expert, rather than random selection.

Central Limit Theorem

A statistical theory stating that, given a sufficiently large sample size from a population with a finite level of variance, the mean of all samples from the same population will be approximately equal to the mean of the population.

Consistent Estimator

An estimator that, as the sample size increases, converges in probability to the true parameter value.