Washington Industries Inc

question 74

Multiple Choice

Washington Industries Inc.is considering a project that has an initial after-tax outlay or after-tax cost of $350,000.The respective future cash inflows from its five-year project for years 1 through 5 are $75,000 each year.Washington expects an additional cash flow of $50,000 in the fifth year.The firm uses the IRR method and has a hurdle rate of 10%.Will Washington accept the project?

• A)Washington accepts the project because it has an IRR greater than 10%.
• B)Washington rejects the project because it has an IRR less than 10%.
• C)Washington accepts the project because it has an IRR greater than 5%.
• D)There is not enough information to answer this question.

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Definitions:

Woodrow Wilson

The 28th President of the United States, serving from 1913 to 1921, known for leading the country through World War I and advocating for the League of Nations.

Trusts

Companies combined to limit competition.

Recall

A Progressive-era reform that allowed the removal of public officials by popular vote.