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.

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