An Independent,financing Type Project Has an IRR of 11

question 58

Multiple Choice

An independent,financing type project has an IRR of 11.4 percent and a required rate of return of 10.6 percent.Given this,you know the

• A)initial cash flow is negative.
• B)net present value is positive.
• C)cash flows are conventional.
• D)accept/reject decision cannot be based on the IRR.
• E)project should be rejected.

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Definitions:

Operating Activities

Activities that are directly tied to the production and delivery of goods and services, representing the primary revenue-generating activities of an entity.

Cash Equivalents

Short-term, highly liquid investments that are readily convertible to known amounts of cash and so close to their maturity that they present insignificant risk of changes in value.

Investing Activities

Transactions related to the acquisition or disposal of long-term assets and other investments not classified as cash equivalents.

Financing Activity

Refers to transactions and events that affect long-term liabilities and equity of a company, including securing loans and issuing shares.