Solely on the internal rate of return rule

Assignment Help Finance Basics
Reference no: EM131725604

You are considering an investment with the following cash flows. If the required rate of return for this investment is 13.5%, should you accept it based solely on the internal rate of return rule? Why or why not?

Year

0

1

2

3

Cash flows

-$12,000

$5,500

$8,000

-$1,500

A. Yes; because the IRR exceeds the required return.

B. Yes; because the IRR is a positive rate of return.

C. No; because the IRR is less than the required return.

D. No; because the IRR is a negative rate of return.

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

Reference no: EM131725604

Questions Cloud

Common stock and retained earnings : A firm has the following book-value balance sheet; Debt =$ 14 ,000, Common Stock ($1 par)= 11 and Retained Earnings = $ 23 ,000. The book value of assets
Explain the concepts of management information systems : Describe the kinds of questions McGraw-Hill might have asked as part of determining the feasibility of the Primis idea.
Problem regarding the after-tax cash flow : If the firm's tax rate is 34%, calculate both its after-tax cash flow and its value given a risk adjusted discount rate of 12%
What is the probability that this student is underaged : You observe a student trying to put a note with his name in the goblet of fire. What is the probability that this student is underaged - How does the stake need
Solely on the internal rate of return rule : If the required rate of return for this investment is 13.5%, should you accept it based solely on the internal rate of return rule?
Describe the objective of the communication : Writing Skills Problem Staff members from the marketing department of your firm are doing a splendid job selling products to customers.
Which country do you think has higher per capita income : Which country do you think has higher per capita income? Why do you think so? Calculate the elasticity of demand at Q = 200 for each country.
What is brendas shut-down price for a dozen of eggs : What is Brenda's shut-down price for a dozen of eggs? Should Brenda continue producing eggs in the short run? Explain how you determined your answer.
Discuss the systems that are the most appropriate : Discuss the systems that are the most appropriate to introduce into your organization. Analyze a few of the systems that can have the greatest impact.

Reviews

Write a Review

Finance Basics Questions & Answers

  Borrower preferred maturity of a loan

Should a Yield Curve influence a borrower's preferred maturity of a loan? Use the Internet to learn more about the issue. Offer your own opinion on this issue.

  What was two-year holding period return on infosys share

You bought Infosys share for Rs 4,250 two years ago. You held the stock for two years, and received dividendper share of Rs 90 and Rs 125 respectively.

  What is the scientific method and how does it guide research

What is the scientific method, and how does it guide research?- Discuss the basic characteristics of scientific inquiry and their value to science.

  The firm has an aftertax cost of debt of 43 percent and a

phils carvings inc. wants to have a weighted average cost of capital of 7.1 percent. the firm has an aftertax cost of

  Determine an annual budget and develop

You have been hired as an executive director of a small nonprofit organization. Among your many duties are to determine an annual budget and develop a fiscal plan for the organization.

  Changes in slope of yc and economic prospects

Changes in Slope of YC and Economic Prospects - Construct yield curves and Unemployment rate and building approvals indicators.

  Determine the most prudent investment

A startup landscaping company has to determine the most prudent investment in new trucks and mowers. They narrow their choice to two sets. Which set will be better given that money is worth 7.25%?

  Proposed a graph-oriented method for determining

In Section 4.6, we proposed a graph-oriented method for determining the set of strings that could be popped from the stack in a reduce move of an operator-precedence parser.

  Give an example of measuring the transaction risk of an

1 one of your newer clients is the senior lending officer of a local bank. he is new to his position and does not have

  Produce the same after-tax cash inflows

Green Landscaping's cost of capital is 12.26 percent. What is the NPV of a project if the initial costs are $1,345,240 and the project life is estimated as 12 years? The project will produce the same after-tax cash inflows of $610,715 per year at ..

  Cost reconciliation report under the fifo method

In the cost reconciliation report under the FIFO method, the costs to be accounted for equals the cost of beginning work in process inventory plus the cost of units transferred out.

  Describe the outpatient code editor

Describe the Outpatient Code Editor (OCE) and provide external sources of how these are used in Healthcare. (minimum 700 words and sources for information)

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd