A firm is evaluating two independent projects utilizing the internal rate of return technique.Project X has an initial investment of $80,000 and cash inflows at the end of each of the next five years of $25,000.Project Z has a initial investment of $120,000 and cash inflows at the end of each of the next four years of $40,000.The firm should:
A) accept both if their cost of capital is 15% at the maximum.
B) accept only Z if their cost of capital is 15% at the maximum.
C) accept only X if their cost of capital is 15% at the maximum.
D) reject both if their cost of capital is 12% at the maximum.

Question

Quizplus · Accepted Answer

Using a financial calculator:Project X - CF0 = -80,000, C01 = 25,000, F01 = 5, IRR CPT = 16.99%Project Z - CF0 = -120,000, C01 = 40,000, F01 = 4, IRR CPT = 12.59%

A Firm Is Evaluating Two Independent Projects Utilizing the Internal