Which of the following statements is most likely correct for a project costing $50,000 and returning $14,000 per year for five years?
A)NPV = $3,071.01
B)NPV = $20,000
C)IRR = 2.8 percent
D)IRR is greater than 10 percent $50,000 = $14,000

Question

Quizplus · Accepted Answer

The IRR is the discount rate that makes the NPV of cash flows equal to zero. Given the cash inflows of $14,000 per year for five years, the IRR is likely greater than 10 percent, as the total inflow ($70,000) significantly exceeds the initial cost ($50,000).

Which of the Following Statements Is Most Likely Correct for a Project