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Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter19: Capital Investment
Section: Chapter Questions
Problem 22E
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Tex Co have correctly calculated the following measures for a new project they wish to implement;
Payback 6 years 4 months
The Internal Rate of Return IRR is 18%
The cost of capital is 15%
Which of the following statements is true? The project is acceptable because the IRR is lower than the cost of capital
Choose
The project s not acceptable because the IRR is lower than the cost of capital
DUS ACTIVITY
The project is not acceptable because the payback is less than five years
The projee s acceptable because the IRR is greater than the cost ot capital
The project is areptable because the IRR is lower than the cost of capital
Transcribed Image Text:Tex Co have correctly calculated the following measures for a new project they wish to implement; Payback 6 years 4 months The Internal Rate of Return IRR is 18% The cost of capital is 15% Which of the following statements is true? The project is acceptable because the IRR is lower than the cost of capital Choose The project s not acceptable because the IRR is lower than the cost of capital DUS ACTIVITY The project is not acceptable because the payback is less than five years The projee s acceptable because the IRR is greater than the cost ot capital The project is areptable because the IRR is lower than the cost of capital
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