Day: October 21, 2021

The following information relates to a possible capital investment, costing £900,000.

The company has a cost of capital of 8%. 

Which statement about the project is correct? 

Select ONE answer:

1. It has an internal rate of return greater than the cost of capital.
2. It has an internal rate of return less than the cost of capital.
3. It will be viable if discounted at 9%.
4. It will be viable if the capital cost is increased to £1m.

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct
3. Not correct
4. Not correct

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