Datta Computer Systems is considering a project that has the following cash flow data. What is the project's IRR? Note that a project's projected IRR can be less than the WACC (and even negative), in which case it will be rejected.
A) 9.70%
B) 10.78%
C) 11.98%
D) 13.31%
E) 14.64%

Question

Quizplus · Accepted Answer

By calculating the NPV of the cash flows at various discount rates, we can determine that the project has an IRR of 13.31%, which is greater than the company's WACC (as long as it is less than the required rate of return). Therefore, the project should be accepted.

Datta Computer Systems Is Considering a Project That Has the Following