Question
Assume a new project requires an initial investment of $10 million dollars, with ensuing cash flows of $2, $4 and $5 million in years 1,
Assume a new project requires an initial investment of $10 million dollars, with ensuing cash flows of $2, $4 and $5 million in years 1, 2 and 3. Assuming the company's WACC is 10%, which of the following statements is true?
The firm should reject the project, as the IRR is lower than the WACC.
The firm should accept the project, as the IRR is higher than the WACC.
The firm should accept the project, as the NPV is positive.
The firm should accept the project, as the NPV is negative.
None of these statements are true.
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Financial Management for Public Health and Not for Profit Organizations
Authors: Steven A. Finkler, Thad Calabrese
4th edition
133060411, 132805669, 9780133060416, 978-0132805667
