Tressor Company is considering a 5-year project. The company plans to invest $90,000 now and it forecasts
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Question:
Interest rate | Present value of an annuity of $1 factor for year 5 |
10% | 3.7908 |
12% | 3.6048 |
14% | 3.4331 |
Calculate the internal rate of return to determine whether it should accept this project.
The project should be accepted because it will earn more than 14%.
The project should be accepted because it will earn more than 10%.
The project will earn more than 12% but less than 14%. At a hurdle rate of 14%, the project should be rejected.
The project should be rejected because it will earn less than 14%.
The project should be rejected because it will not earn exactly 14%.
Related Book For
Financial Theory and Corporate Policy
ISBN: 978-0321127211
4th edition
Authors: Thomas E. Copeland, J. Fred Weston, Kuldeep Shastri
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