Question
A proposed project has an initial cost of $38,000 and cash inflows of $12,300, $24,200, and $16,100 for years 1 through 3, respectively. The required
A proposed project has an initial cost of $38,000 and cash inflows of $12,300, $24,200, and $16,100 for years 1 through 3, respectively. The required rate of return is 16.8%. Based on Internal Rate of Return (IRR), should this project be accepted? Why or why not?
a. Yes; The IRR exceeds the required return by .58 percent.
b. No; The IRR is less than the required return by 1.03 percent.
c. Yes; The IRR exceeds the required return by about 1.03 percent.
d. No; The IRR exceeds the required return by .58 percent.
e. Yes; The IRR is less than the required return by .58 percent.
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