esent value of future cash flows is $225,000. The company’s desired rate of return used in the present value computations was 12%. Which of the following statements is true? a.The internal rate of return on the project is more than 12%. b.The internal rate of return on the project is equal to 12%. c.The internal rate of return on the project is less than 12%. d.The project should not be accepted because the net present value is negative.
esent value of future cash flows is $225,000. The company’s desired rate of return used in the present value computations was 12%. Which of the following statements is true? a.The internal rate of return on the project is more than 12%. b.The internal rate of return on the project is equal to 12%. c.The internal rate of return on the project is less than 12%. d.The project should not be accepted because the net present value is negative.
Chapter11: Capital Budgeting And Risk
Section: Chapter Questions
Problem 9P
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A company is contemplating investing in a new piece of manufacturing machinery. The amount to be invested is $210,000. The present value of future cash flows is $225,000. The company’s desired
a.The internal rate of return on the project is more than 12%.
b.The internal rate of return on the project is equal to 12%.
c.The internal rate of return on the project is less than 12%.
d.The project should not be accepted because the net present value is negative.
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