not working capital.\ but Andrew O'Haff of O'Hara Inc. The CFO believes project acceptance should be based on the NPV, project's risk-adjus, the president, insists that no project should be accepted unless its IRR exceeds the cost of

$15,000

anded cost of capital. Now you must make a recommendation on a project that has a The president and tho cash flows:

$110,000

at the end of Year 1 and

-$100,000

at the end of Year 2.

10%

, the NPV is

$2

CFO both agree that the appropriate cost of capital for this project is

10%

. At

11.32%

. Which of the 35.37 , but you find two IRRs, one at

6.33%

and one at

527%

, and a MIRR of analysis and recomm following statements best describes your optimal recommendation, i.e., the either the CFO or the presidat that is best for the company and least likely to get you in trouble with\ a. You should recomment? an IRR that is less than the project be rejected because, although its NPV is positive, it has\ b. You should recommend that cof capital. although it has two IRRs, in this project be accepted because (1) its NPV is positive and (2) the cost of capital. You should explain this to better to focus on the MIRR, which exceeds increase if the project is accepted.\ c. You should recommend that the project be rejected. Although its NPV is positive it has two IRRs, one of which is less than the cost of capital, which indicates that the firm's value will decline if the project is accepted.\ d. You should recommend that the project be rejected because, although its NPV is positive, its MIRR is less than the cost of capital, and that indicates that the firm's value will decline if it is accepted.\ e. You should recommend that the project be rejected because its NPV is negative and its IRR is

but an the staff of O'Hara Inc. The CFO believes project acceptance should be based on the NPV, but Andrew O'Hara, the president, insists that no project should be accepted unless its IRR exceeds the project's risk-adjusted cost of capital. Now you must make a recommendation on a project that has a cost of $15,000 and the CFO both agree that the $110,000 at the end $100,000 at the end of 2 . The president a 10%, the NPV is 11.32%. Which of the following statements bre, one at 6.33% and one at 527%, and a MIRR of analysis and recommendation that is best for tescribes your optimal recommendation, i.e., the either the CFO or the president? a. You should recommend that the project be rejected because, although its NPV is positive, it has an IRR that is less than the cost of capital. b. You should recommend that the project be accepted because (1) its NPV is positive and (2) although it has two IRRs, in this case it would be better to focus on the MIRR, which exceeds the cost of capital. You should explain this to the president and tell him that the firm's value will increase if the project is accepted. c. You should recommend that the project be rejected. Although its NPV is positive it has two IRRs, one of which is less than the cost of capital, which indicates that the firm's value will decline if the project is accepted. d. You should recommend that the project be rejected because, although its NPV is positive, its MIRR is less than the cost of capital, and that indicates that the firm's value will decline if it is accepted. e. You should recommend that the project be rejected because its NPV is negative and its IRR is but an the staff of O'Hara Inc. The CFO believes project acceptance should be based on the NPV, but Andrew O'Hara, the president, insists that no project should be accepted unless its IRR exceeds the project's risk-adjusted cost of capital. Now you must make a recommendation on a project that has a cost of $15,000 and the CFO both agree that the $110,000 at the end $100,000 at the end of 2 . The president a 10%, the NPV is 11.32%. Which of the following statements bre, one at 6.33% and one at 527%, and a MIRR of analysis and recommendation that is best for tescribes your optimal recommendation, i.e., the either the CFO or the president? a. You should recommend that the project be rejected because, although its NPV is positive, it has an IRR that is less than the cost of capital. b. You should recommend that the project be accepted because (1) its NPV is positive and (2) although it has two IRRs, in this case it would be better to focus on the MIRR, which exceeds the cost of capital. You should explain this to the president and tell him that the firm's value will increase if the project is accepted. c. You should recommend that the project be rejected. Although its NPV is positive it has two IRRs, one of which is less than the cost of capital, which indicates that the firm's value will decline if the project is accepted. d. You should recommend that the project be rejected because, although its NPV is positive, its MIRR is less than the cost of capital, and that indicates that the firm's value will decline if it is accepted. e. You should recommend that the project be rejected because its NPV is negative and its IRR is