Union Atlantic Corporation, which has a required rate of return equal to 14 percent, is evaluating a capital budgeting project. The initial cash outflow is $170,000 and cash inflow at the year-end of each of the following four years is $60,750. According to this information, which of the following statements is correct?
A. The project's internal rate of return (IRR) must be less than 14 percent.
B. The project's discounted payback period must be greater than its economic life.
C. The project is acceptable as the net present value of the project is positive.
D. The project's discounted payback period should be compared with the traditional payback period to make the correct decision.
E. The project is not acceptable as the net present value is less than the difference in the total cash inflow and cash outflow.
Answer: C
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Even though he was the facilities director with the county, Keith loosened his tie and waded into the raw, untreated sewage with the rest of the project team
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Real options can affect the size of a project's expected NPV but not project's risk as measured by the standard deviation or coefficient of variation of the NPV.
Answer the following statement true (T) or false (F)