Project X Has the Following Cash Flows: C₀ = +2,000,C₁

question 19

Multiple Choice

Project X has the following cash flows: C₀ = +2,000,C₁ = -1,300,and C₂ = -1,500.If the IRR of the project is 25% and if the cost of capital is 18%,you would:

• A)accept the project.
• B)reject the project.

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Definitions:

Common Resource

A resource like air or water that is non-excludable and rivalrous, meaning it's impossible to prevent anyone from using it, but one person's use diminishes another person's ability to use it.

Nonexcludable

A nonexcludable good is one where it is not possible to prevent people who have not paid for it from having access to it, typical in public goods.

Marginal Social Benefit

The additional benefit received by society as a whole from consuming one more unit of a good or service.

Public Good

A good or service offered to every member of a community free of charge, supplied either by the government or a non-profit private entity.