Question
You are considering a project A which has cash flows given below: Year 0 Year 1 Year 2 Project A ($8,000) $50,000 ($50,000) Project A's
You are considering a project A which has cash flows given below:
Year 0 Year 1 Year 2 Project A ($8,000) $50,000 ($50,000)
Project A's cost of capital is 15%. Which of the following statements best describes Project A? (Hint: draw NPV profile)
Group of answer choices
The project should be rejected at its current cost of capital.
Two of the statements are consistent with Project A.
No matter what its cost of capital is, it should be rejected.
If both IRRs were greater than its cost of capital, it should be accepted.
The project's NPV profile starts with a negative NPV at the cost of capital of 0%.
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