Reference no: EM133061759

Investments X and Y are mutually exclusive and have an initial cost of $100,000 each. Investments X provides cash inflows of $35,000 a year for three years while Investments Y produces a cash inflow of $116,000 in Year 3. Which investment(s) should be accepted if the discount rate is 11.7 percent? What if the discount rate is 13.5 percent?

-Accept X at both discount rates

-Accept X at 11.7 percent and neither at 13.5 percent

-Accept Y at both discount rates

-Accept both at 11.7 percent and neither at 13.5 percent

-Accept Y at 11.7 percent and neither at 13.5 percent

An investment has an up-front cost of $100,000. The investment 's WACC is 12 percent and its net present value is $10,000. Which of the following statements is most correct?

a. The investment should be rejected since its return is less than the WACC.

b. The investment 's internal rate of return is less than 12 percent.

c. The investment 's modified internal rate of return is less than 12 percent.

d. All of the statements above are correct.

e. None of the statements above is correct.