1. if the internal rate of return is less than the required rate of return for a
ID: 2592548 • Letter: 1
Question
1. if the internal rate of return is less than the required rate of return for a project, then the net present value of that project is positive. True or False?
2. The internal rate of return is computed by finding the discount rate that equates the present value of a project’s cash outflows with the present value of its cash inflows. True or False?
3. Darwin Inc. sells a particular textbook for $31. Variable expenses are $22 per book. At the current volume of 45,000 books sold per year the company is just breaking even. Given these data, the annual fixed expenses associated with the textbook total:
Multiple Choice
$1,395,000
$990,000
$405,000
$1,800,000
3. Darwin Inc. sells a particular textbook for $31. Variable expenses are $22 per book. At the current volume of 45,000 books sold per year the company is just breaking even. Given these data, the annual fixed expenses associated with the textbook total:
Explanation / Answer
Ans. 1.)False: Means if IRR is less than Required rate of return PV of net cash flow is negative.
2.) True: If both Rate is equal than PV of cash outflow and PV cash inflow also same
3.) Calculation of Fixed Cost Expenses.
Current break even position
Sales Amt (31X45000) = $1395000
Variable cost (22X45000) = ($990000)
Fixed cost = $405000
* Present sales level are in break even level
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.