Union Atlantic Corporation,which has a required rate of return equal to 14 percent,is evaluating a capital budgeting project that has the following characteristics: Union Atlantic's capital budgeting manager has determined that the project's net present value is $7,008.According to this information,which of the following statements is correct?

Question

Union Atlantic Corporation,which has a required rate of return equal to 14 percent,is evaluating a capital budgeting project that has the following characteristics:  Union Atlantic's capital budgeting manager has determined that the project's net present value is $7,008.According to this information,which of the following statements is correct?

Quizplus · Accepted Answer

Since the project has a positive net present value and Union Atlantic's required rate of return is 14 percent, it means that the project's internal rate of return is greater than 14 percent, making option A correct. There is no information given about the economic life of the project, so option B cannot be determined. Therefore, the correct choice is option C, where the project should be purchased by Union Atlantic.

Union Atlantic Corporation,which Has a Required Rate of Return Equal