Assuming that this project will provide Rearden with perpetual annual cash flows of $45,000,Rearden should:
A)invest today since the NPV is positive.
B)invest today since the NPV is negative.
C)invest today since the NPV using the hurdle rate is negative.
D)delay investing since the NPV using the hurdle rate is negative.
E)delay investing since the NPV using the hurdle rate is positive.

Question

Quizplus · Accepted Answer

D)NPV = 11ea7cce_3c69_b84b_928c_f96d4f4717ee_TB1626_11 - 1,000,000 = -281,046 (using hurdle rate)
Since this is negative Rearden should delay investment.

Assuming That This Project Will Provide Rearden with Perpetual Annual