Ask Question
BusinessBusiness
1 December, 21:37

You have finally been asked to interview for your dream job. The interviewer wants to test your finance knowledge and tells you just one piece of information about a project being analyzed by H. Cochran, Inc. This one piece of information is that the internal rate of return is calculated to be exactly 15 per cent.

The interviewer then wants you to determine what is the net present value for this project based on the choices below:

A) negative at a discount rate of 10%.

B) positive at a discount rate of 20%.

C) negative at a discount rate of 20%.

D) positive at a discount rate of 15%.

E) Not enough information is provided to answer.

+4
Answers (2)
  1. 1 December, 21:42
    0
    C) negative at a discount rate of 20%.

    Explanation:

    IRR is the interest rate at which the present value of the project or investment becomes zero. The discount rate above this rate will result the negative NPV and Below this rate will result the positive NPV.

    10% is lower than the IRR of 15%, so the NPV should be positive.

    20% is higher than the IRR of 15%, so the NPV should be negative.

    15% is equal to the IRR of 15%, so the NPV should be zero.
  2. 1 December, 21:56
    0
    The Correct answer for the given condition is "C"

    Explanation:

    Internal rate of return is the rate at which the NPV (Net Present Value) either Positive or Negative the capital of the project will be Zero all the cash flows. Therefore, the net present Value is Zero at the interest rate of IRR equal to 15 percent.

    If the value of IRR is above the given interest rate, Net Present value will be negative

    And

    If the value of IRR is below the given interest rate, Net Present value will be positive
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “You have finally been asked to interview for your dream job. The interviewer wants to test your finance knowledge and tells you just one ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
When a good with a perfectly inelastic demand is taxed, the incidence of the tax is borne: A. by consumers and producers equally. B. mostly by producers. C. entirely by consumers. D. mostly by consumers. E. entirely by producers.
Answers (1)
Cruz Gray Inc. positions its beauty and skin care products as the only products in the market that are 100 percent natural and are not tested on animals. This gives the company a significant advantage over its competitors.
Answers (1)
What problems might you encounter when using the Web for research? Check all that apply. Unreliable content Lack of current news Undocumented sources Time-consuming searches Lack of search tools
Answers (1)
What is the present value of $7,000 due 8 periods hence, discounted at 6%?
Answers (1)
You have been asked to test the effectiveness of ingo corporation's control of manually approving all purchases over $25,000. during the year, ingo corporation has made 1,000,000 purchases, of which 3,000 were over $25,000.
Answers (1)
New Questions in Business
Vineyard Corporation, a manufacturer of fine wines, began the year with 20,000 bottles in inventory. The company estimated the budgeted sales for the four quarters of the current year to be 200,000 bottles, 150,000 bottles, 250,000 bottles, and
Answers (1)
Chegg "Thurman Corporation issued 500,000 shares of $0.50 par value capital stock at its date of incorporation for cash at a price of $2.5 per share. During the first year of operations, the company earned $180,000 and declared a dividend of $45,000.
Answers (1)
List the following in order of most to least liquid
Answers (1)
Which of the following would result if the business purchased supplies on credit? B. supplies would increase, and capital would increase C. supplies would increase, and accounts payable would increase D.
Answers (2)
When the federal trade commission determines that an ad is deceptive or unfair, it can: force the firm that ran the deceptive ad to get "advance clearance" on all future ad campaigns.
Answers (1)
Home » Business » You have finally been asked to interview for your dream job. The interviewer wants to test your finance knowledge and tells you just one piece of information about a project being analyzed by H. Cochran, Inc.
Sign Up Forgot Password?