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Which one of the following indicates an accept decision for a project? The company WACC is 13.2% A. Payback = 7.2 years; Requ

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Answer #1

The correct answer is option D

Explanation :- The internal rate of return (IRR) is the discount rate which makes the present value of project cash inflows equal to the initial investment. For an independent project when the IRR is greater than WACC, the project cash inflows will exceed its costs and therefore the project is worthy to be undertaken. In this example the WACC is 13.2 % whereas the IRR is 14 % i.e. greater than WACC which indicates that the project should be accepted.

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