Soft and Cuddly is considering a new toy that will produce the following cash flows.Should the company produce this toy if the firm requires a 15 percent rate of return?
A)Yes, because the project's rate of return is 10.21 percent
B)Yes, because the project's rate of return is 11.47 percent
C)No, because the project's rate of return is 10.21 percent
D)No, because the project's rate of return is 11.47 percent
E)No, because the internal rate of return is zero percent

Question

Soft and Cuddly is considering a new toy that will produce the following cash flows.Should the company produce this toy if the firm requires a 15 percent rate of return? 
A)Yes, because the project's rate of return is 10.21 percent 
B)Yes, because the project's rate of return is 11.47 percent 
C)No, because the project's rate of return is 10.21 percent 
D)No, because the project's rate of return is 11.47 percent 
E)No, because the internal rate of return is zero percent

Quizplus · Accepted Answer

The IRR is the interest rate that causes the NPV to equal zero.

Soft and Cuddly Is Considering a New Toy That Will