Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

8. You require a 14 percent rate of return from an investment. The investment costs $58,000 and will produce cash inflows of $27,000 every year

image text in transcribed
8. You require a 14 percent rate of return from an investment. The investment costs $58,000 and will produce cash inflows of $27,000 every year for 3 years. Should you accept this project based on its internal rate of return? Why or why not? A. Yes, because the IRR is 14.04 percent B. Yes, because the IRR is 14.65 percent C. Yes: because the IRR is 18.76 percent D. No; because the IRR is 18.76 percent E. None of the above 9. The dividend on AT's common stock will be $2 in 1 year, S4 in 2 years, and $6.00 in 3 years. You can sell the stock for $100 in 3 years. If you require a 6% return on your investment, how much would you be willing to pay for a share of this stock today? A $75.45 B. $77.24 C. $81.52 D. $82.76 E. $94.45 10. The net present value (NPV) rule can be best stated as: A) An investment should be rejected if the NPV is negative. B) An investment should be rejected if the NPV is positive and accepted if it is negative. C) An investment with greater cash inflows than casbroutflows, regardless of when the cash flows occur, will always have a positive NPV and therefore should always be accepted. D) An investment should be accepted if the NPV is positive and rejected if the NPV is zero or negative

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Management In The Public Sector Tools Applications And Cases

Authors: Xiaohu Wang

3rd Edition

0765636891, 9780765636898

More Books

Students also viewed these Finance questions