Should this project be accepted or rejected based on irr

Assignment Help Financial Management
Reference no: EM131595150

A project has an initial cash inflow of $95,500 and cash flows of -$48,700 in Year 1 and -$57,200 in Year 2. The discount rate is 9 percent. Should this project be accepted or rejected based on IRR? Why?

a) Accepted: because the IRR of 6.98 percent is less than the discount rate

b) Accepted: because the IRR of 8.21 percent is less than the discount rate

c) Accepted: because the IRR of 8.78 percent is less than the discount rate

d) Rejected: because the IRR of 8.21 percent is less than the discount rate

e) Rejected: because the IRR of 6.98 percent is less than the discount rate

Reference no: EM131595150

Questions Cloud

Structure the strategic planning : Ascertain the importance of strategic planning for an organization. suggest one (1) strategy you may use to structure the strategic planning session
What is cost of common equity and wacc : Patton Paints Corporation has a target capital structure of 45% debt and 55% common equity, with no preferred stock. What is cost of common equity and WACC.
Identify relatively risky areas that indicate the need : Perform analytical procedures to help you identify relatively risky areas that indicate the need for further attention during the audit, if any.
What is evanec cost of retained earnings and rs : The Evanec Company's next expected dividend, D1, is $3.36; its growth rate is 5%; What is Evanec's cost of retained earnings, rs?
Should this project be accepted or rejected based on irr : Should this project be accepted or rejected based on IRR? Why?
How do you calculate the payback period : How do you calculate the payback period for a 50,000 dollar student loan with an interest rate of 5%?
How many different possible outcomes are there of drawing : Seven members of an audience of 25 people are to be chosen to win a prize. The first name drawn will win half of the planet.
Future earnings-dividends and common stock price : The future earnings, dividends, and common stock price of Carpetto Technologies Inc. are expected to grow 6% per year.
How many different ballots are possible in the election : There are five positions open on the board of a swimming club, and sixteen people are eligible for election to the board.

Reviews

Write a Review

Financial Management Questions & Answers

  Calculate the stocks coefficient of variation

Expected return A stock's returns have the following distribution: Demand for the Company's Products Probability of This Demand Occurring Rate of Return If This Demand Occurs Weak 0.2 -38% Below average 0.2 -7 Average 0.4 15 Above average 0.1 30 Stro..

  Two bonds should offer the same annual effective rate

AAA firm’s semiannual bond has 12 years maturity and coupon rate of 8.75% semiannually. The firm also sells annual bonds with all the same condition except the coupon is paid annually (means ytm is the same). What is the price of this annual coupon b..

  Non-for-profit acute care facility

General hospital a non-for-profit acute care facility, has estimated the folling costs for its inpatient services. what the hospital underlying cost structure?

  Compute and graph the one day holding period profit

Compute and graph the 1-day holding period profit if you delta- and gamma-hedge this position using the stock

  What is the price per share if its equity cost of capital

NoGrowth Corporation currently pays a dividend of $2 per year, and it will continue to pay this dividend forever. What is the price per share if its equity cost of capital is 15% per year?

  What is the percentage price change of bonds

Bond J has a coupon rate of 6 percent and Bond K has a coupon rate of 12 percent. Both bonds have 15 years to maturity, make semiannual payments, and have a YTM of 9 percent. If interest rates suddenly rise by 2 percent, what is the percentage price ..

  What is the overall rate of return on the portfolio

What is the overall rate of return on the portfolio over the last year?

  What percentage of stock is needed

What percentage of stock is needed to have one of her friends elected under the cumulative voting rule?

  How much did it cost publishers last year

Due to increased mailing costs, the new rate will cost publishers $60 million; this is 13.1% more than they paid the previous year. How much did it cost publishers last year?(Enter your answers in dollars not in millions. Round to the nearest hundred..

  How much would the bond be worth at that time

In March 2012, Daniela Motor Financing (DMF), offered some securities for sale to the public. Under the terms of the deal, DMF promised to repay the owner of one of these securities $400 in March 2052, but investors would receive nothing until then. ..

  Interest compounded annually

Beatrice invests $1,460 in an account that pays 5 percent simple interest. How much more could she have earned over a 6-year period if the interest had compounded annually?

  What is the internal rate of return for investment

An apartment building in your neighborhood is for sale for $140,000. The building has four units, which are rented at $500 per month each. The tenants have long-term leases that expire in 5 years. Maintenance and other expenses for care and upkeep ar..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd