A project requires an investment of $10 million and offers an annual after-tax cash flow of $1,250,000 indefinitely.If the firm's WACC is 12.5% and the project is riskier than the firm's average projects,should it be accepted%?
A) Yes, since the project's NPV is positive.
B) Yes, since a zero NPV indicates marginal acceptability.
C) No, since the project's NPV is zero.
D) No, since the project's NPV is negative.
Correct Answer:
Verified
Q45: Other things equal,which of the following will
Q46: Calculate a firm's WACC given that the
Q47: An implicit cost of increasing the proportion
Q48: A firm has a debt-to-equity ratio of
Q49: If a firm earns the WACC on
Q51: A firm is considering a project that
Q52: As debt is added to the capital
Q53: A firm is 40% financed by debt
Q54: What is the expected growth rate in
Q55: If a firm has twice as much
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