Should you accept it based solely on the internal rate

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Reference no: EM133377082

Question: You are considering an investment with the following cash flows. If the required rate of return for this investment is 12%, should you accept it based solely on the internal rate of return rule? Why or why not?

Year Cash Flow
0 -$90,000
1 $50,000
2 -$ 8,400
3 $60,000
4 $21,000
5 -$10,000

a. no; because the IRR is negative.

b. yes; because the IRR is greater than the required return

c. no; because the IRR is less than the required return

d. You cannot apply the IRR rule in this case because there are multiple IRRs.

e. The IRR rule cannot be applied because the IRR is negative.

Reference no: EM133377082

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