You are considering an investment for which you require a 14 percent rate of return. The investment will cost $85,000 and produce cash inflows of $25,000 a year for 5 years. Should you accept this project based on its internal rate of return? Why or why not?

	a.	yes; because the IRR is 14.40% is higher than the required rate of return 14%.
	b.	no; because the IRR is 5.67% is less than the required rate of return 14%.
	c.	yes; because the IRR is 5.67% is less than the required rate of return 14%.
	d.	no; because the IRR is 14.40% is higher than the required rate of return 14%.

A college football coach has just signed a five-year contract that requires a salary of $400,000 in each of the first three years and $500,000 in the latter two years. Assuming the current interest rate is 5%, what is the present value of the coach's contract?

	a.	$1,917,760
	b.	$1,892,414
	c.	$2,200,000
	d.	$2,006,992

Answer rating: 100% (QA)

1 The internal rate of return IRR is the discount rate that makes the net present value NPV of a pro... View the full answer