Washington Industries Inc. is considering a project that has an initial after-tax outlay or after-tax cost of $350,000. The respective future cash inflows from its five-year project for years 1 through 5 are $75,000 each year
Washington expects an additional cash flow of $50,000 in the fifth year. The firm uses the IRR method and has a hurdle rate of 10%. Will Washington accept the project?
A) Washington accepts the project because it has an IRR greater than 10%.
B) Washington rejects the project because it has an IRR less than 10%.
C) Washington accepts the project because it has an IRR greater than 5%.
D) There is not enough information to answer this question.
Answer: B
Explanation: B) Using a financial calculator or software program like Excel or trial and error (and rounding our answer to two decimal places), we get IRR = 6.32%. Thus, Washington will reject the project as its IRR is less than its hurdle rate.
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Calvin and Gloria were divorced in a prior year. As part of the final divorce decree of the court, Calvin was ordered to pay $500 a month toward the support of his two children, Robert and Myra. During 2016, Calvin got 6 months behind in his child support payments. As a result of his delinquency, two things happened in 2016 to allow Calvin to catch up in his payments. Gloria had Calvin's wages garnished for $1,000 to pay 2 delinquent months' child support. Calvin, a cash-basis taxpayer, was due $2,000 for past work he had done for the XYZ Corp. He told the XYZ Corp. to pay the $2,000 directly to Gloria to make up 4 months' child support. The XYZ Corp. paid the money directly to Gloria. Which of the following statements is true?
a. Calvin did not receive any constructive income in 2016 when the $1,000 wages were garnished and the $2,000 income was paid directly to Gloria. b. Calvin constructively received the $1,000 wages but not the $2,000 income in 2016. c. Calvin constructively received both the $1,000 wages and the $2,000 income in 2016. d. Calvin constructively received the $2,000 income but not the $1,000 wages in 2016.
Paired comparison scaling is useful when the number of brands is large, because it requires direct comparison and overt choice
Indicate whether the statement is true or false