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A firm is considering investing in a project. The firm has a WACC of 14%. This project costs $6,000 and is expected to product positive
A firm is considering investing in a project. The firm has a WACC of 14%. This project costs $6,000 and is expected to product positive cash flows of $1,000 for 7 years.
Should the firm adopt this project?
Yes, because th project pays back the original investment and provides an additional $1,000 in positive cash flow. | ||
Yes, because the ROI is 16.7%, which is higher than the firm's WACC. | ||
Yes, because IRR is positive. | ||
No, because NPV is negative. The costs are higher than the benefits. |
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