Purchase Solution

IRR can be less than WACC; which case is rejected

Not what you're looking for?

Ask Custom Question

10) Thompson stores is considering a project that has the following cash flow data. What is the projects IRR. Note that the projects projected IRR can be less than WACC (and even negative), in which case it will be rejected.

YEAR CASH FLOW

0 (1000)
1 300
2 295
3 290
4 285
5 270

CHOICES GIVEN:

11.16%

12.4%

13.78%

15.16%

16.68%

Purchase this Solution

Solution Summary

The solution calculates which case is rejected.

Solution provided by:
Education
  • BE, Bangalore University, India
  • MS, University of Wisconsin-Madison
Recent Feedback
  • "Your explanation to the answers were very helpful."
  • "What does 1 and 0 means in the repair column?"
  • "Went through all of the formulas, excellent work! This really helped me!"
  • "try others as well please"
  • "Thank you, this helped a lot. I was not sure how to plug in those numbers to a formula. This was a great help. Now I have to figure out how to explain cost of capital is used in net present value analysis, and how cost of capital is used in net present value analysis. This stuff gets confusing."
Purchase this Solution


Free BrainMass Quizzes
Introduction to Finance

This quiz test introductory finance topics.

MS Word 2010-Tricky Features

These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.

Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.

Learning Lean

This quiz will help you understand the basic concepts of Lean.

Business Processes

This quiz is intended to help business students better understand business processes, including those related to manufacturing and marketing. The questions focus on terms used to describe business processes and marketing activities.