View the step-by-step solution to:

Year Cash flow 0 -169,000 1 46,200 2 87,300 3 41,000 4 39,000 Required Payback Period 2.

2.
Year          Cash flow
0               -169,000
1                  46,200
2                   87,300
3                   41,000
4                   39,000
Required Payback Period    2.5
Required AAR                    7.25%
Required Return                 8.50%
Reference: 06_01
Based on the internal rate of return of _____for this project, you should _____ the project. (Points: 2)
        8.95%; accept
        10.75%; accept
        8.44%; reject
        9.67%; reject
        10.33%; reject
3. The internal rate of return (IRR):
(I) rule states that a typical investment project with an IRR that is less than the required rate should be accepted.
(II) is the rate generated solely by the cash flows of an investment.
(III) is the rate that causes the net present value of a project to exactly equal zero.
(IV) can effectively be used to analyze all investment scenarios. (Points: 2)
        I and IV only
        II and III only
        I, II, and III only
        II, III, and IV only
        I, II, III, and IV

2.
Year Cash flow
0 -169,000
1 46,200
2 87,300
3 41,000
4 39,000
Required Payback Period 2.5
Required AAR 7.25%
Required Return 8.50%
Reference: 06_01
Based on the internal rate of return of _____for this project, you
should _____ the project. (Points: 2)
8.95%; accept
10.75%; accept
8.44%; reject
9.67%; reject
10.33%; reject
3. The internal rate of return (IRR):
(I) rule states that a typical investment project with an IRR that is
less than the required rate should be accepted.
(II) is the rate generated solely by the cash flows of an investment.
(III) is the rate that causes the net present value of a project to
exactly equal zero.
(IV) can effectively be used to analyze all investment scenarios.
(Points: 2)
I and IV only
II and III only
I, II, and III only
II, III, and IV only
I, II, III, and IV

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