Webster's Wants to Introduce a New Product That Has a Startup

question 47

Multiple Choice

Webster's wants to introduce a new product that has a startup cost of $15,000.The product has a 2-year life and will provide cash flows of $12,700 in Year 1 and $6,300 in Year 2.The required rate of return is 10 percent.Should the product be introduced? Why or why not?

• A)Yes;The PI is 1.04.
• B)No;The PI is .90.
• C)Yes;The IRR is 19.74 percent.
• D)Yes;The NPV is $851.24.
• E)No;The IRR is 8.78 percent.

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