Webster's Wants to Introduce a New Product That Has a Start-Up

Multiple Choice

Webster's wants to introduce a new product that has a start-up cost of $7,800.The product has a 2-year life and will provide cash flows of $6,700 in Year 1 and $4,300 in Year 2.The required rate of return is 14 percent.Should the product be introduced? Why or why not?

A) Yes; the NPV is $1,108.15.
B) Yes; the IRR is 12.97 percent.
C) Yes; the IRR is 28.72 percent.
D) Yes; the NPV is $1,409.27.
E) No; the IRR is 12.94 percent.