Idaho Industries Inc. is considering a project that has an initial after-tax outlay or after-tax...
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Finance
Idaho Industries Inc. is considering a project that has an initial after-tax outlay or after-tax cost of $450,000. The respective future cash inflows from its five-year project for years 1 through 5 are $95,000 each year. Idaho expects an additional cash flow of $60,000 in the fifth year. The firm uses the IRR method and has a hurdle rate of 10%. Will Idaho accept the project?
A.
Idaho accepts the project because it has an IRR 5.6%.
B.
Idaho accepts the project because it has an IRR 9.8%.
C.
Idaho rejects the project because it has an IRR 5.6%.
D.
Idaho rejects the project because it has an IRR of 1.8%.
E.
Idaho rejects the project because it has an IRR of 9.8%.
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