Question

You are evaluating an investment project and learn the following: The project’s NPV at a discount...

You are evaluating an investment project and learn the following: The project’s NPV at a discount rate of 20% is +$35,879 The project’s NPV at a discount rate of 24% is +$12,356 The project’s NPV at a discount rate of 26% is -$1,923 Based on (i)-(iii) above you know the project’s IRR must be: a) Less than 20% b) Greater than 26% c) Between 20% and 24% d) Between 24% and 26%

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
When a capital budgeting project has an NPV of zero, what does this mean? The project’s...
When a capital budgeting project has an NPV of zero, what does this mean? The project’s IRR will be less than the required hurdle rate for the project The firm’s stockholders will earn a positive return, but it will be less than their required return, given the risk of the investment The firm’s stockholders will earn a negative return The firm’s security holders will earn their required rate of return, given the risk of the investment none of the above
Suppose a project generates positive cash flows for the next 12 years and the project’s NPV...
Suppose a project generates positive cash flows for the next 12 years and the project’s NPV is $110,000 when discount rate is 6%. Also suppose that the IRR=8.7%. Which of the following may be a possible value for NPV when discount rate is 7.4%? A. -$25,000 B. 0 C. $25,000 D. $125,000 E. None of the above
The NPV of a project decreases with discount rate r. When r=10%, NPV=$10 million; when r=11%,...
The NPV of a project decreases with discount rate r. When r=10%, NPV=$10 million; when r=11%, NPV= -$5 million. The IRR of this project must be ________. Group of answer choices a. Above 11%. b. Below 10%. c. Not enough information. d. Between 10% and 11%.
You are considering a project with conventional cash flows and the following characteristics: Discounted Payback 2.95...
You are considering a project with conventional cash flows and the following characteristics: Discounted Payback 2.95 Years NPV $510,000 IRR 12% Which of the following statements is correct given this information? I. The discount rate used in computing the net present value was greater than 12%. II. The payback period must be greater than 2.95 years. III. This project should be accepted as the NPV is positive.
1) If the NPV of a project with one sign reversal is positive, then its IRR:...
1) If the NPV of a project with one sign reversal is positive, then its IRR: Select one: a. must be greater than the required rate of return b. must be less than the required rate of return c. could be greater or less than the required rate of return d. cannot be determined without actual cash flows 2) Which of the following statements is INCORRECT? Select one: a. An acceptable project should have an NPV greater than or equal...
You are evaluating a project that will require an initial investment of $200. Over the next...
You are evaluating a project that will require an initial investment of $200. Over the next four years, the project is expected to generate after-tax cash flows of 40, 50, 60, 70. If 8% is your appropriate discount rate, what is the NPV and IRR of this project? Choices: 21.02, 9.20% 33.67, 10.03% 41.55, 11.88% -10.55, 6.65% -21.02, 3.58%
Which of the following statements is CORRECT? Assume that the project being considered has normal cash...
Which of the following statements is CORRECT? Assume that the project being considered has normal cash flows, with one outflow followed by a series of inflows. A: The NPV of a relatively low-risk project should be found using a relatively high WACC B: The lower the WACC used to calculate it, the lower the calculated NPV will be If a project’s NPV is greater than zero, then its IRR must be less than zero C: If a project’s NPV is...
Net present value (NPV) Evaluating cash flows with the NPV method The net present value (NPV)...
Net present value (NPV) Evaluating cash flows with the NPV method The net present value (NPV) rule is considered one of the most common and preferred criteria that generally lead to good investment decisions. Consider this case: Suppose Blue Hamster Manufacturing Inc. is evaluating a proposed capital budgeting project (project Beta) that will require an initial investment of $2,750,000. The project is expected to generate the following net cash flows: Year Cash Flow Year 1 $325,000 Year 2 $475,000 Year...
If the NPV of a project with one sign reversal in negative, then the project's IRR...
If the NPV of a project with one sign reversal in negative, then the project's IRR ____________ the firm's required rate of return could be greater or less than is exactly equal to must be greater than must be less than
Which of the statements below is true? a. The graphic plot of project NPV against discount...
Which of the statements below is true? a. The graphic plot of project NPV against discount rate is called the NPV profile b. NPV profile is always downward sloping, i.e., NPV decreases with higher discount rate c. At the intercept point of the NPV profile with the horizontal axis, the project IRR is zero. d. All of the above e. None of the above