Assume Company ABC must decide whether to purchase a piece of factory equipment for $45,000. The equipment would only last four years, but it is expected to generate $15,000 of additional annual profit during those years. Company ABC also thinks it can sell the equipment for scrap afterward for about $1,000. Using IRR, Company ABC can determine whether the equipment purchase is a better use of its cash than its other investment options.

What is the NPV of the project for a discount rate equals 12%? (consider rounding)	Answer 1Choose...False817-2721,0681,21413.24%13.89%204-61614.15%True
What is the NPV of the project for a discount rate equals 13 %? (consider rounding)	Answer 2Choose...False817-2721,0681,21413.24%13.89%204-61614.15%True
What is the NPV of the project for a discount rate equals 14 %? (consider rounding)	Answer 3Choose...False817-2721,0681,21413.24%13.89%204-61614.15%True
What is the value of the IRR of this project?	Answer 4Choose...False817-2721,0681,21413.24%13.89%204-61614.15%True
If the required rate of return of ABC is 14%, the project is accepted (True, False)	Answer 5Choose...False817-2721,0681,21413.24%13.89%204-61614.15%True
If the required rate of return of ABC is 11 %, the project is accepted. (True, False)	Answer 6Choose...False817-2721,0681,21413.24%13.89%204-61614.15%True
The company evaluated another alternative with IRR equals 12%, this alternative is better than the proposed project (True, False)	Answer 7Choose...False817-2721,0681,21413.24%13.89%204-61614.15%True
If the discount rate of the project is 15% the project should be rejected (True, False)	Answer 8Choose...False817-2721,0681,21413.24%13.89%204-61614.15%True

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