Suppose Your Firm Is Considering Investing in a Project with the Cash

question 39

Multiple Choice

Suppose your firm is considering investing in a project with the cash flows shown as follows, that the required rate of return on projects of this risk class is 8 percent, and that the maximum allowable payback and discounted payback statistic for the project are three and three and a half years, respectively. $$\begin{array} { l l l l l l l } \text { Time } & 0 & 1 & 2 & 3 & 4 & 5 \\\text { Cash Flow } & - 100,000 & 30,000 & 45,000 & 55,000 & 30,000 & 10,000\end{array}$$ Use the IRR decision rule to evaluate this project; should it be accepted or rejected?

• A)-4.95 percent, reject
• B)4.95 percent, accept
• C)-23.18 percent, reject
• D)23.18 percent, accept

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Definitions:

Credibility

The quality of being trusted and believed in, often reflecting a person's reliability or the convincing power of an argument.

Authority Figure

An individual who holds power or influence, often in a leadership role, within a specific context.

Sanction

A sanction can refer to a penalty imposed for breaking a law, rule, or agreement, or it can denote official permission or approval for an action.

Complementary Patterns

Interaction patterns in relationships where the behaviors of one individual are aligned with and support the behaviors of another, creating a balanced dynamic.