Reference no: EM132794093

Problem 1: If the cost of capital of Opera House is 16 percent, should Opera House be acceptd on the basis of the IRR if it's cash flows are as follows?

Year  Cash Flow

0          $80,300

1      21,900

2       25,800

3         31,600

4         26,400

5          20,600

Multiple Choice

Option 1: No, because the IRR is 17.26 percent.
Option 2: Yes, because the IRR is 17.26 percent.
Option 3: Yes, because the IRR is 18.70 percent.
Option 4: Yes, because the IRR is 17.98 percent.
Option 5: No, because the IRR is 18.70 percent.