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Q: Suppose you determine that the NPV of a project is \$1,525,855. What does that mean? A. The project would add value to the firm. B. In all cases, investing in this project would be better than
investing in a project that has an NPV of \$850,000. C. Under all conditions, the project’s payback would be less than the profitability index. D. The project’s IRR would have to be less that the firm’s discount rate.
A: C. In all cases, investing in this project would be better than investing in a project that has an NPV of \$850,000
Original conversation
[object Object]User: Suppose you determine that the NPV of a project is \$1,525,855. What does that mean? A. The project would add value to the firm. B. In all cases, investing in this project would be better than investing in a project that has an NPV of \$850,000. C. Under all conditions, the project’s payback would be less than the profitability index. D. The project’s IRR would have to be less that the firm’s discount rate.

Weegy: C. In all cases, investing in this project would be better than investing in a project that has an NPV of \$850,000
bernanrd98|Points 80|

User: At what rate must \$400 be compounded annually for it to grow to \$716.40 in 10 years? A. 5% B. 6% C. 7% D. 8%

Weegy: A=P(1+r)^n
716.40=400(1+r)^10
r=.06

\$400 must be invested at a rate of 6% compounded annually for it to grow to \$716.40 in ten years. The answer is A. 6%

User: Your company is considering an investment in a project which would require an initial outlay of \$300,000 and produce expected cash flows in Years 1 through 5 of \$87,385 per year. You have determined that the current after-tax cost of the firm’s capital (required rate of return) for each source of financing is as follows: Cost of debt 8% Cost of preferred stock 12% Cost of common stock 16% Long-term debt currently makes up 20% of the capital structure, preferred stock 10%, and common stock 70%. What is the net present value of this project? A. \$871 B. \$463 C. \$1,241 D. \$1,568

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