A firm considers a project with the following cash flows: time-zero = +20,000,years 1-5 = -4,500.Should the project be accepted if the cost of capital is 10%?
A) Yes, the IRR of the project is 4.06%.
B) Yes, the IRR of the project is 12.5%.
C) No, the IRR of the project is 4.06%.
D)No, the IRR of the project is 12.5%.

Question

Quizplus · Accepted Answer

The IRR of the project is 4.06%, which is less than the cost of capital of 10%. Therefore, the project should not be accepted.

A Firm Considers a Project with the Following Cash Flows