An Investment Has the Following Cash Flows and a Required

question 109

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:

Closed Path

In mathematics and graph theory, a path that starts and ends at the same vertex, forming a loop or circuit.

Minimization Problem

A type of optimization problem aiming to find the minimum value of a function or the least cost solution under a set of constraints.

Stepping-Stone Method

A mathematical procedure used in transportation and logistics to find the most cost-effective way to distribute products from multiple sources to multiple destinations.

Optimal Solution

The best possible answer or strategy obtained from a selection of alternatives that maximizes or minimizes an objective function within given constraints.