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JT CorpHas a Cost of Capital of 6

Question 95

Multiple Choice

JT Corp.has a cost of capital of 6.2% and a required rate of return of 7.9%.The company evaluated an investment and determined the IRR to be zero.Should JT accept or reject the investment and why?


A) Accept, because the investment will generate the minimum required return
B) Reject, because the investment will not generate any cash flows.
C) Accept, because the required rate of return is greater than the cost of capital
D) Reject, because investment will generate a return that is less than the minimum required rate of return

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