You have an investment opportunity that will pay you $100,000 today if you agree to pay back $25,000 at the end of each of the next 5 years. If the cost of capital (required rate of return) on this investment is 12%, is this a good investment?

Possible answers:

Yes, this is a positive NPV

No, this is a negative NPV

Yes, the IRR exceeds the cost of capital

No, the IRR is below the cost of capital

Yes, the IRR is below the cost of capital

No, the IRR exceeds the cost of capital

A and C

A and E

B and D

B and F

A, C, and E

B, D, and F

Note: A (Yes, this is a positive NPV) is incorrect.