You Are Considering an Investment with the Following Cash Flows

question 98

Multiple Choice

You are considering an investment with the following cash flows.If the required rate of return for this investment is 15.5 percent,should you accept the investment based solely on the internal rate of return rule? Why or why not?

• A)Yes; The IRR exceeds the required return.
• B)Yes; The IRR is less than the required return.
• C)No; The IRR is less than the required return.
• D)No; The IRR exceeds the required return.
• E)You cannot apply the IRR rule in this case.

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Definitions:

Stability Strategy

A corporate strategy focused on maintaining current operations without significant growth or reduction, aiming to preserve the existing business model and market position.

Early Retirement

Early retirement is the decision to leave the workforce before the conventional retirement age, often influenced by personal savings, pension plans, or health considerations.

Task-Analysis Inventory

A systematic collection and examination of data related to the tasks performed in a specific job, aiming to understand the skills and actions required.

Training Needs

The gap between current capabilities of employees and the skills required to perform their job effectively, guiding the development of training programs.