Geronimo, Inc

question 55

Multiple Choice

Geronimo, Inc. is considering a project that has an initial outlay or cost of $220,000. The respective future cash inflows from its four-year project for years 1 through 4 are: $50,000, $60,000, $70,000, and $80,000, respectively. Geronimo uses the internal rate of return method to evaluate projects. Will Geronimo accept the project if its hurdle rate is 10%?

• A) Geronimo will not accept this project because its IRR is about 9.70%.
• B) Geronimo will not accept this project because its IRR is about 8.70%.
• C) Geronimo will not accept this project because its IRR is about 6.50%.
• D) Geronimo will not accept this project because its IRR is about 4.60%.

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