Richa is looking at the results of a Capital Investment Appraisal. The report shows that, assuming a
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Question:
- Richa is looking at the results of a Capital Investment Appraisal. The report shows that, assuming a Cost of Capital of 10%, investing in a plant to manufacture a new clothing line would give a positive NPV and an IRR of 23%. Should the company buy the machine?
- Yes. NPV is positive and IRR exceeds cost of capital.
- Yes. NPV is positive and IRR is less than cost of capital.
- No. NPV does not provide enough information.
- No. IRR is higher than the cost of capital
- Which one of the following statements is NOT true?
- Retained profits represent a free source of funds.
- The issuing of shares to raise finance can be expensive.
- Retained profits are the main source of business funds.
- Borrowing can increase the risk that a company faces.
Related Book For
Cost Accounting A Managerial Emphasis
ISBN: 978-0131495388
12th edition
Authors: Charles T. Horngren, Srikant M. Datar, George Foster
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