Answered step by step
Verified Expert Solution
Question
1 Approved Answer
12. Assume that you have the following information on a project: - The project will yield cash flows of $1500 per year forever, with the
12. Assume that you have the following information on a project: - The project will yield cash flows of $1500 per year forever, with the first cash flow occurring one year from today. - The NPV of this project is $1450. - The required rate of return is 10.25%. What is the IRR (rounded to 2 decimal places) of this project? a. 11.38% b. 8.34% c. 15.91% d. 12.73% e. None of the answers listed above is within 0.10 points of the correct answer. 13. Which of the following statements is most correct concerning a project with normal cash flows (i.e., a cash outflow in Year 0 followed by cash inflows in all subsequent years)? a. If the NPV of a project is positive then the payback period rule will always accept the project. b. If the NPV of a project is negative, then the profitability index of the project will always be greater than one. c. If the profitability index of a project is greater than one, then the IRR will always be less than the project's cost of capital. d. If the NPV of a project is zero, then the IRR of the project will be equal to the discount rate for the project. e. If the discount rate of a project is zero, then the project will always be accepted
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started