A company is contemplating investing in a new piece of manufacturing machinery. The amount to be invested is $100,000. The present value of the future cash flows at the company's desired rate of return is $100,000. The IRR on the project is 12%. Which of the following statements is true?
A) The project should not be accepted because the net present value is negative.
B) The desired rate of return used to compute the present value of the future cash flows is less than 12%.
C) The desired rate of return used to compute the present value of the future cash flows is more than 12%.
D) The desired rate of return used to compute the present value of the future cash flows is equal to 12%.
Correct Answer:
Verified
Q123: Which of the following is not considered
Q129: Periods in time that experience increasing price
Q134: Following is a table for the present
Q136: Following is a table for the present
Q137: The production department is proposing the purchase
Q139: A company is contemplating investing in a
Q143: In capital rationing, alternative proposals that survive
Q144: Match each definition that follows with the
Q152: The process by which management allocates available
Q160: Match each definition that follows with the
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents