Suppose Your Firm Is Considering Investing in a Project with the Cash

question 53

Multiple Choice

Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 8 percent, and that the maximum allowable payback and discounted payback statistics for the project are 3.5 and 4.5 years, respectively. Use the IRR decision to evaluate this project; should it be accepted or rejected?

• A) IRR = 16.92%; accept the project
• B) IRR = 7.123%; reject the project
• C) IRR = 18.32%; accept the project
• D) IRR = 7.59%; reject the project