What is the NPV of a project that requires an initial investment of 23 and positive cash flows from years 1 through 3 of 5, 10, and 25? Assume a discount rate of 5%.

11.8

13.6

14.4

15.9

Should you invest in the above project based on its NPV?

Yes

No

Insufficient data

What is the IRR of the above project?

-19.8%

12.1%

19.9%

25.5%

If the cost of capital for the above project were 30%, would you invest in this project based on the IRR?

Yes

No

Insufficient data

If the cost of capital for the above project were 20%, would you invest in this project based on the IRR?

Yes

No

Insufficient data

What is the payback period of the above project?

1 years

2 years

3 years

4 years

Which of the following are potential problems when using IRR to judge investments?

Inability to distinguish borrowing from lending cash flows.

Multiple IRR's calculated when cash flow signs switch multiple times.

Potential incorrect decisions when comparing two mutually exclusive projects.

All of the above.