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

question 55

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 10 percent,and that the maximum allowable payback and discounted payback statistics for the project are three and a half and four and a half years,respectively.Use the IRR decision to evaluate this project; should it be accepted or rejected?

• A)IRR = 16.92 percent; accept the project
• B)IRR = 7.123 percent; reject the project
• C)IRR = 8.81 percent; reject the project
• D)IRR = 10.59 percent; accept the project

---

Definitions:

Quantity Supplied

The amount of a particular good or service that suppliers are willing and able to provide at a given price during a certain period.

Demand Function

A mathematical expression showing the relationship between the quantity demanded of a good and its price, holding other factors constant.

Supply Function

A numerical model illustrating how the amount of a product provided is related to its cost.

Subsidy

A subsidy is a financial contribution provided by the government or a public body to support businesses, consumers, or sectors, reducing the price of goods or services.