Question
An investment costs $10,000 and will generate annual cash inflows of $1,770 for ten years. According to the net present value and internal rate of
An investment costs $10,000 and will generate annual cash inflows of $1,770 for ten years. According to the net present value and internal rate of return methods of capital budgeting, should the firm make this investment if its cost of capital is (a) 10% or (b) 14%? (Hint: calculate NPV and IRR under each scenario. Determine if the project is accepted under NPV rule and IRR rule for each scenario). Select your answer from the following dropdown boxes: -NPV at 10% is [ Select ] and NPV at 14% is [ Select ] . -According to NPV rule, [ Select ] at 10%. According to IRR rule, [ Select ] at 10% -According to NPV rule, [ Select ] at 14%. According to IRR rule, [ Select ] at 14%
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