Uniquely designed to the customers specifications

Assignment Help Financial Management

Reference no: EM13879586

Auto Art sells original works of art on a prepaid basis as each piece is uniquely designed to the customer's specifications. For one project, the cash flows are $9,500 and -$10,300 for years 0 and 1, respectively. Based on the internal rate of return should this project be accepted if the required return is 12 percent?

A. Accept the project

B. Reject the project

C. The IRR cannot be used to evaluate this type of project

D. The firm should be indifferent to either accepting or rejecting this project

E. Insufficient information is provided to make a decision based on IRR

Reference no: EM13879586

Questions Cloud

Most frequently use which two types of investment criteria : In actual practice, managers most frequently use which two types of investment criteria?

What is the significance of currency devaluations to home : What is the significance of currency devaluations to the home country?

Design a collection of tables that satisfies 2nf but not 3nf : Using the FD list in problem 1, identify the FDs that violate 2NF. Using knowledge of the FDs that violate 2NF, design a collection of tables that satisfies 2NF but not 3NF.

What is your recommendation on this project : A project has a discount rate of 14 percent, an initial cost of $99,200, an inflow of $56,400 in year 1 and an inflow of $75,900 in year 2. Your boss requires that every project return a minimum of $1.06 for every $1 invested. Based on this informati..

Uniquely designed to the customers specifications : Auto Art sells original works of art on a prepaid basis as each piece is uniquely designed to the customer's specifications. For one project, the cash flows are $9,500 and -$10,300 for years 0 and 1, respectively. Based on the internal rate of return..

Reject these projects based on IRR analysis : You are considering two mutually exclusive projects. Project A has cash flows of -$125,000, $51,400, $52,900, and $63,300 for years 0 to 3, respectively. Should you accept or reject these projects based on IRR analysis?

Draw a supply and demand graph illustrating the effect : Draw a supply and demand graph illustrating the effect of a minimum wage

What is the approximate yield to call : What is the approximate yield to call of a 10% coupon rate, $1,000 par value bond, currently priced at $1200, if the call can be made in seven years at a price of $1,025?

Based solely on the internal rate of return rule : You are considering an investment that costs $152,000 and has projected cash flows of $71,800, $86,900, and -$11,200 for years 1 to 3, respectively. If the required rate of return is 15.5 percent, should you accept the investment based solely on the ..

User Account

All Pages