FOR THIS AND THE NEXT QUESTION. Consider the project cash flows below. Cost of capital is 7%. What is your capital budgeting decision?
Year
Cash Flow
0
-$7.50
1
45.00
2
-40.00
A. Accept the project. IRR is 8.51% and is greater than the cost of capital
B. Reject the project. IRR is 8.51% and is less than the cost of capital
C. Accept the project. NPV is $0.3815
D. Accept the project. MIRR is 6.52%
E. Reject the project. NPV is -$0.3815
F. None of the above
QUESTION 8
If the NPV profile of the above project is constructed, the profile would intersect the x-axis at
A. Approximately 390%
B. Approximately 9.8%
C. Approximately 6.5%
D. None of the above