An Investment Has the Following Cash Flows and a Required

question 32

Multiple Choice

An investment has the following cash flows and a required return of 13 percent. Based on IRR, should this project be accepted? Why or why not?

• A)No; The IRR exceeds the required return by about 0.06 percent.
• B)No; The IRR is less than the required return by about 0.94 percent.
• C)Yes; The IRR exceeds the required return by about 0.06 percent.
• D)Yes; The IRR exceeds the required return by about 0.94 percent.
• E)Yes; The IRR is less than the required return by about 0.06 percent.

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Definitions:

Philip Crosby

An American businessman and author, known for promoting concepts related to quality management such as "zero defects" and the cost of quality.

Zero Defects

A quality management concept aiming for the reduction of defects and errors in a product to zero through continuous improvement.

Continuous Improvement

An ongoing effort to improve products, services, or processes by making small, incremental improvements over time.

Deming

Refers to W. Edwards Deming, an American engineer, statistician, professor, author, lecturer, and management consultant known for his work in the field of quality management and for his influence on modern business practices.