Question

You are considering a project that you think might create value for your firm. The finance...

You are considering a project that you think might create value for your firm. The finance department has told you that the required rate of return is 13% and only projects with a NPV of $3000 or greater will be accepted. You do your calculations and find that the IRR of the project would be exactly 13%. Will the finance department accept this project?

Select one:

a. Yes

b. No

c. One cannot determine without calculating the NPV of the project.

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
CAPITAL BUDGETING CRITERIA A firm with a 13% WACC is evaluating two projects for this year's...
CAPITAL BUDGETING CRITERIA A firm with a 13% WACC is evaluating two projects for this year's capital budget. After-tax cash flows, including depreciation, are as follows: 0 1 2 3 4 5 Project M -$27,000 $9,000 $9,000 $9,000 $9,000 $9,000 Project N -$81,000 $25,200 $25,200 $25,200 $25,200 $25,200 Calculate NPV for each project. Round your answers to the nearest cent. Do not round your intermediate calculations. Project M    $ Project N    $ Calculate IRR for each project. Round your answers to two...
Suppose your firm is considering investing in a project with the cash flows shown below, that...
Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 13 percent, and that the maximum allowable payback and discounted payback statistic for the project are 2 and 3 years, respectively.   Time 0 1 2 3 4 5 6   Cash Flow -970 170 430 630 630 230 630 Use the NPV decision rule to evaluate this project; should it be accepted or...
CAPITAL BUDGETING CRITERIA A firm with a 14% WACC is evaluating two projects for this year's...
CAPITAL BUDGETING CRITERIA A firm with a 14% WACC is evaluating two projects for this year's capital budget. After-tax cash flows, including depreciation, are as follows: 0 1 2 3 4 5 Project M -$18,000 $6,000 $6,000 $6,000 $6,000 $6,000 Project N -$54,000 $16,800 $16,800 $16,800 $16,800 $16,800 Calculate NPV for each project. Round your answers to the nearest cent. Do not round your intermediate calculations. Project M    $ Project N    $ Calculate IRR for each project. Round your answers to two...
Suppose your firm is considering investing in a project with the cash flows shown as follows,...
Suppose your firm is considering investing in a project with the cash flows shown as follows, that the required rate of return on projects of this risk class is 10 percent, and that the maximum allowable payback and discounted payback statistics for the project are three and a half and four and a half years, respectively. Use the IRR decision to evaluate this project; should it be accepted or rejected? Time 0 1 2 3 4 5 6 Cash Flow...
A firm with a 14% WACC is evaluating two projects for this year's capital budget. After-tax...
A firm with a 14% WACC is evaluating two projects for this year's capital budget. After-tax cash flows, including depreciation, are as follows: 0 1 2 3 4 5 Project M -$9,000 $3,000 $3,000 $3,000 $3,000 $3,000 Project N -$27,000 $8,400 $8,400 $8,400 $8,400 $8,400 Calculate NPV for each project. Do not round intermediate calculations. Round your answers to the nearest cent. Project M:    $   Project N:    $   Calculate IRR for each project. Do not round intermediate calculations. Round your answers to...
11) Your company is choosing between two MUTUALLY EXCLUSIVE projects that have a required rate of...
11) Your company is choosing between two MUTUALLY EXCLUSIVE projects that have a required rate of return of 8.25%. You have gathered the following data. Which of the project(s) should be accepted? IRR NPV Project A 6.40% $ 22.6 million Project B 8.50% $ 16.1 million A) Accept neither project, as both have a required return that is above the IRR. B) Accept project B with the higher IRR. C) Accept project A with the higher NPV. D) Accept both...
Suppose William Inc. uses a WACC of 9% for below-average risk projects, 11% for average-risk projects,...
Suppose William Inc. uses a WACC of 9% for below-average risk projects, 11% for average-risk projects, and 13% for above-average risk projects. Which of the following independent projects should William accept, assuming that the company uses the NPV method when choosing projects? Project A, which has average risk and an IRR = 12%. Project B, which has below-average risk and an IRR = 9.5%. Project C, which has above-average risk and an IRR = 13.5%. Without information about the projects'...
You are considering the following two projects and can take only one. Your cost of capital...
You are considering the following two projects and can take only one. Your cost of capital is 11.9%. The cash flows for the two projects are as follows​ ($ million): Project   Year 0   Year 1   Year 2   Year 3   Year 4   A -$103 28 34 44 53 B -$103 53 44 34 24 What is the IRR of each project? Which project should you choose? Select one: a. IRR of Project A = 11.9%, IRR of Project B = 17.7%....
You are considering two mutually exclusive projects. Based upon risk, the appropriate discount rate for both...
You are considering two mutually exclusive projects. Based upon risk, the appropriate discount rate for both projects is 10%. The first project has an IRR of 22% and an NPV of $22,432. The second project has an IRR of 12% and an NPV of $24,456. Which project should you select? accept both projects since both are acceptable. pick the project with the shorter payback period. choose the project with the higher NPV. unable to determine due to insufficient information. choose...
Suppose your firm is considering investing in a project with the cash flows shown below, that...
Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 12 percent, and that the maximum allowable payback and discounted payback statistic for the project are 2 and 3 years, respectively.   Time 0 1 2 3 4 5 6   Cash Flow -980 180 420 620 620 220 620 Use the NPV decision rule to evaluate this project; should it be accepted or...