Benji\'s has an opportunity with an initial cash flow of $48,900 and future cash

Question

Benji's has an opportunity with an initial cash flow of $48,900 and future cash flows of -$31,300 in Year 1 and -$21,600 in Year 2. The discount rate is 7 percent. Should this project be accepted or rejected? Why?

Accepted; because the IRR of 5.28 percent is less than the discount rate Accepted; because the IRR of 5.77 percent is less than the discount rate Rejected: because the IRR of 5.28 percent is less than the discount rate Rejected; because the IRR of 5.77 percent is less than the discount rate Rejected; because the IRR of 6.01 percent is less than the discount rate

Explanation / Answer

Answer:

Accepted; because the IRR of 5.77 percent is less than the discount rate

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