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

question 98

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. 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:

Results-Oriented

An approach or mindset focused on achieving specific goals or outcomes.

Data Warehouse

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Data Warehouse

A centralized repository of integrated data from one or more disparate sources, stored for analysis, reporting, and data mining.

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A repository or storage place where large amounts of data are held and managed.