Q5
A company is considering a project that is expected to produce the
following cash flows over the next five years: $22,500, $27,900,
$41,800, $33,000, and $15,000 respectively. The company has $98,000
available, which is the amount needed to initiate the project.
Should the company accept this project if the required rate of
return is 12%? Why or why not?
Question 5 options: No; The IRR is 13.47%, which is greater than
the required return.
Yes; The PI is.96, which is considered an acceptance signal.
No; Atlantic would lose $2,407 in NPV if they accept the
project.
Yes; Atlantic will make $3,567 in NPV if they accept the
project.
No; The PI is 1.04, which is considered a reject signal.
✓ Answer: Yes, Atlantic will make $ 3567 in NPV if they accept the project.
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