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Tough Luck Energy Company's Internal Rate of Return Is 12

Question 31

Multiple Choice

Tough Luck Energy Company's internal rate of return is 12%. The interest rate for borrowing money from a bank is 6%. TLEC can invest in a wind farm and make a calculated 19% internal rate of return; or it can invest in a nuclear plant and make a calculated 10% internal rate of return. TLEC should build


A) only a wind farm.
B) only a nuclear plant.
C) both a wind farm and a nuclear plant.
D) neither a wind farm nor a nuclear plant.

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