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A company is evaluating a capital budgeting proposal that requires an initial outlay of $100,000 and will provide cash inflows of $60,000 in each of
A company is evaluating a capital budgeting proposal that requires an initial outlay of $100,000 and will provide cash inflows of $60,000 in each of the next two years. The required return on the project is 15%. Should the company undertake the project?
a) Yes, because the project returns 20%, which exceeds the required 15% return.
b) Yes, because the project increases shareholder wealth.
c) No, because the project increases shareholder wealth.
d) No, because the project's net present value is negative.
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