Suppose a Particular Investment Project Will Require an Initial Cash

question 38

Multiple Choice

Suppose a particular investment project will require an initial cash outlay of $1,000,000 and will generate a cash inflow of $500,000 in each of the next three years.What is the project's IRR? Suppose a company's hurdle rate is 15%,should it accept the project?

• A) 23%; reject the project
• B) 23%; accept the project
• C) 15%; reject the project
• D) 15%; accept the project

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Definitions:

Distance Runner

An athlete who specializes in long-distance races, typically anything from 3,000 meters to marathons.

Waist

The part of the human body below the ribs and above the hips, often measured to assess obesity or body fat distribution.

Hips

The region on each side of the pelvis, where the thigh bone (femur) joins the pelvis.

Muscle Dysmorphia

A psychological disorder characterized by a distorted body image and an obsessive belief that one's body is too small or inadequately muscular.