You Are Considering an Investment with the Following Cash Flows

question 49

Multiple Choice

You are considering an investment with the following cash flows.If the required rate of return for this investment is 13.5%,should you accept it based solely on the internal rate of return rule? Why or why not?
$\begin{array}{|l|l|}\hline \text { Year } & \text { Cash Flow } \\\hline 0 & -£ 12,000 \\\hline 1 & £ 5,500 \\\hline 2 & £ 8,000 \\\hline 3 & -£ 1,500 \\\hline\end{array}$

• A)yes; because the IRR exceeds the required return.
• B)yes; because the IRR is a positive rate of return.
• C)no; because the IRR is less than the required return.
• D)no; because the IRR is a negative rate of return.
• E)You can not apply the IRR rule in this case because there are multiple IRRs.

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Definitions:

Identity Crisis

A psychological state in which an individual questions their sense of self or place in society, often occurring during major life transitions.

Multiple Identities

The concept that an individual has several self-aspects or social roles that they identify with.

Bicultural Identity

The condition of identifying and integrating two cultural orientations and practices into one's sense of self.

Ethnic Backgrounds

The cultural heritage and ancestry of individuals, which can influence their customs, traditions, language, and societal roles.