Question: Evaluate the following project using an IRR criterion based on an opportunity cost of 10%. CFo=-6000, CF1=3500, CF2=3600 a) Reject since IRR exceeds opportunity cost

Evaluate the following project using an IRR criterion based on an opportunity cost of 10%. CFo=-6000, CF1=3500, CF2=3600

a) Reject since IRR exceeds opportunity cost

b) Reject since opprotunity cost exceeds IRR

c) Accept since opportunity costs exceeds IRR

d) Accept since IRR exceeds the opportunity cost

q2) A Young professional offers to buy car with four equal annual payments of $3000. Assuming you are indifferent to cash versus credit, that you can invest at 10%return, and that your reservation price is $9000( reservation price is the minimum price you must receive for the car), should you accept?

a) yes present value of the offer exceeds the reservation price

b) no present value of the offer is below the reservation price

c) no ; present value of the offer is same as the reservation price

d) yes the total amount of payments of the offer exceeds the reservation price

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