1. You are considering an investment with the following cash flows:

Year 0: -$165,000

Year 1: $200,000

Year 2: $250,000

Year 3: -$300,000

The firms hurdle rate is 10%. Should we accept or reject this project and why?

Multiple Choice

• No, IRR is less than the 10% hurdle rate

• No, the NPV is negative at a 10% discount rate

• Yes, the IRR is less than the 10% hurdle rate

• Yes, the NPV Is positive at a 10% discount rate

A project is projected to cost $1,500,000 to undertake. It will generate positive cash inflows as follows: Year 1 - $400,000; Year 2 500,000; Year 3 - $650,000; Year 4 750,000; Year 5 800,000. What is the projects IRR?

Multiple Choice

• 17 %

• 21 %

• 26 %

• 22 %