Question
Kevin Bacons brother, Chris P.s company is setting up a hog farm. Hes considering a new feedlot that entails the following cash flows (x$1000): Year
Kevin Bacons brother, Chris P.s company is setting up a hog farm. Hes considering a new feedlot that entails the following cash flows (x$1000):
Year | Cash Flow |
0 | ($2,500.00) |
1 | $2,250.00 |
2 | $1,750.00 |
3 | $1,500.00 |
4 | $1,000.00 |
5 | ($4,250.00) |
The required return is 11% for this project.
What does the IRR of the project tell Chris P.?
Group of answer choices
a) Chris should do the project because the IRR is greater than the required return.
b) Nothing. IRR is not a valid decision making rule when there are negative future cash flows.
c) Chris should not do the project because the IRR is greater than the required return.
d) Chris should do the project because the IRR is less than the required return.
e) Chris should not do the project because the IRR is less than the required return.
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