Lucie is reviewing a project with an initial cost of $38,700 and cash inflows of $9,800,$16,400,and $21,700 for Years 1 to 3,respectively.Should the project be accepted if it has been assigned a required return of 9.75 percent? Why or why not?
A)Yes; because the IRR exceeds the required return by .34 percent
B)Yes; because the IRR is less than the required return by .28 percent
C)Yes; because the IRR exceeds the required return by .28 percent
D)No; because the IRR exceeds the required return by .34 percent
E)No; because the IRR is only 9.69 percent

Question

Quizplus · Accepted Answer

The IRR of the project is 10.09%, which exceeds the required return of 9.75%. Therefore, the project should be accepted.

Lucie Is Reviewing a Project with an Initial Cost of $38,700