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Suppose your firm is considering investing in Project Q with the cash flows shown in the...

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Finance

Suppose your firm is considering investing in Project Q with thecash flows shown in the table. Assume that the required rate ofreturn on projects of this risk class is 10.5 percent, and that themaximum allowable payback and discounted payback statistics for theproject are 3.5 and 4.5 years, respectively. Use the IRR decisionto evaluate this project; should it be accepted or rejected? A. IRR= 18.32%; accept the project B. IRR = 16.46%; accept the project C.IRR = 12.64%; accept the project D. IRR = 8.12%; reject the projectE. IRR = 7.59%; reject the project

Answer & Explanation Solved by verified expert
3.6 Ratings (674 Votes)
If the project has only positive cash flows after the initial negative cash flows in the form of the initial investment then the projects NPV vs discount rate curve is downward sloping    See Answer
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Transcribed Image Text

Suppose your firm is considering investing in Project Q with thecash flows shown in the table. Assume that the required rate ofreturn on projects of this risk class is 10.5 percent, and that themaximum allowable payback and discounted payback statistics for theproject are 3.5 and 4.5 years, respectively. Use the IRR decisionto evaluate this project; should it be accepted or rejected? A. IRR= 18.32%; accept the project B. IRR = 16.46%; accept the project C.IRR = 12.64%; accept the project D. IRR = 8.12%; reject the projectE. IRR = 7.59%; reject the project

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