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You are on the staff of O'Hara Inc. The CFO believes project acceptance should be based on the NPV, but Andrew OHara, the president, insists

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You are on the staff of O'Hara Inc. The CFO believes project acceptance should be based on the NPV, but Andrew OHara, the president, insists that no projeet 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 two cash flows: 10 000 a the end of Year l and-S100,000 at the end of Y ar 2 The p side tand the CPO b h ag that he app nate st of capital for h pr t is 10% At 10% the NPV is S2,35537, but you find two IRRs, one at 6.33% and one at 527%, and a MIRR of 11.32%, which of the followin recommendation, ie, the analysis and recommendation that is best for the company and least likely to get you in trouble with either the CFO or the president? O a You should recommend that the project be rejected because its NPV is negative and its IRR is less than the cost of capital b Y u should reco end that the pro ect be rejected because, although its NPV is positive, its MIRR is less than the cost of capital, and hat indicates that the firm's g statements best describes your optimal O c 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 d. 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 O e You should recommend that the project be rejected. Although its NPV is postive 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

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