An investment costs $152,000 and has projected cash inflows of $71,800, $86,900, and $11,200 for Years 1 to 3, respectively. If the required rate of return is 12.5 percent, should you accept the investment based solely on the internal rate of return rule? Why or why not?

• A. No; The IRR exceeds the required return.
• B. Yes; The IRR exceeds the required return.
• C. Yes; The IRR is less than the required return.
• D. You should not apply the IRR rule in this case.
• E. No; The IRR is less than the required return.

A project has cash flows of $131,100, $52,800, $53,200, and $83,100 for Years 0 to 3, respectively. The required payback period is two years. Based on the payback period of ________ years for this project, you should ________ the project.

• A. 2.29; reject
• B. 1.98; accept
• C. 2.46; accept
• D. 2.02; reject
• E. 1.79; accept