Project X has the following cash flows: C0 = +2000, C1 = -1,150 and C2 = -1,150. If the
IRR of the project is 9.85% and if the cost of capital is 12%, you would:
A) Accept the project
B) Reject the project
This is a loan project therefore accept.

Question

Quizplus · Accepted Answer

The IRR of the project is 9.85%, which is greater than the cost of capital of 12%. This means that the project is generating a return that is higher than its cost of capital, making it a profitable investment. Therefore, the project should be accepted.

Project X Has the Following Cash Flows: C0 = +2000