Multiple Choice
A project has an initial cost of $68,300 and cash flows of $38,700,$102,300,and -$18,100 for Years 1 to 3,respectively.If the required rate of return for this investment is 8.7 percent,should you accept it based solely on the internal rate of return rule? Why or why not?
A) Yes;because the IRR exceeds the required return
B) Yes;because the IRR is a positive rate of return
C) You cannot apply the IRR rule in this case because there are multiple IRRs.
D) No;because the IRR is a negative rate of return
E) No;because the IRR is less than the required return
Correct Answer:
Verified
Correct Answer:
Verified
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