A Project Costs $12,500 to Initiate

Multiple Choice

A project costs $12,500 to initiate. Cash flows are estimated as $2,500 a year for the first two years and $3,100 a year for the next three years. The discount rate is 11.25%. The net present value for this project is _____ and the internal rate of return is _________ the discount rate.

A) -$2,138.52; more than
B) -$2,138.52; less than
C) $1,800.00; more than
D) $1,800.00; less than
E) $2,138.52; less than