You are considering a project X which has cash flows given below: Year 0 Year 1 Year 2 Project X ($7,000) $40,000 ($40,000) Project X has two IRRs, and its cost of capital is 15%. Which of the following statements best describes Project X? (Hint: draw NPV profile) Group of answer choices No matter what its cost of capital is, it should be accepted. No matter what its cost of capital is, it should be rejected. If the cost of capital would be between the two IRRs, it could be accepted. Since both IRRs are greater than its cost of capital, it should be accepted. All of these statements are not consistent with Project X.
You are considering a project X which has cash flows given below: Year 0 Year 1 Year 2 Project X ($7,000) $40,000 ($40,000) Project X has two IRRs, and its cost of capital is 15%. Which of the following statements best describes Project X? (Hint: draw NPV profile) Group of answer choices No matter what its cost of capital is, it should be accepted. No matter what its cost of capital is, it should be rejected. If the cost of capital would be between the two IRRs, it could be accepted. Since both IRRs are greater than its cost of capital, it should be accepted. All of these statements are not consistent with Project X.
Chapter10: The Basics Of Capital Budgeting: Evaluating Cash Flows
Section: Chapter Questions
Problem 23SP
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Question
You are considering a project X which has cash flows given below:
Year 0 Year 1 Year 2
Project X ($7,000) $40,000 ($40,000)
Project X has two
Group of answer choices
No matter what its cost of capital is, it should be accepted.
No matter what its cost of capital is, it should be rejected.
If the cost of capital would be between the two IRRs, it could be accepted.
Since both IRRs are greater than its cost of capital, it should be accepted.
All of these statements are not consistent with Project X.
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