An Investment Has the Following Cash Flows and a Required

question 19

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 1.53 percent.
• C)Yes; The IRR exceeds the required return by about 0.06 percent.
• D)Yes; The IRR exceeds the required return by about 1.53 percent.
• E)Yes; The IRR is less than the required return by about 0.06 percent.

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Definitions:

Purchasing Agent

An individual responsible for buying goods and services for a company, ensuring the right materials are acquired at the best prices.

Lower Quality

Lower quality typically refers to products or assets that do not meet certain standards or expectations in terms of performance, durability, or reliability.

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the expected quantity, multiplied by the standard cost per unit.

SQ × AP

The standard quantity times actual price formula, used in cost accounting to calculate the variance between the actual cost and the standard cost of raw materials.