Suppose you have put $5,000 into a project that should generate cash inflows of $1,250 for each of the next 5 years.If the interest rate is 8% is this a good investment?
A) Yes, because you will earn a profit of $1,250 dollars in 5 years
B) Yes, because the internal rate of return is higher than the interest rate
C) No, because the internal rate of return is higher than the interest rate
D) No, because the net present value is negative

Question

Quizplus · Accepted Answer

The net present value (NPV) of the cash inflows at an 8% discount rate is negative, indicating that the investment is not profitable.

Suppose You Have Put $5,000 into a Project That Should