Question

How much is the future value of $10,000 in twelve years which earns 11% interest?

$23,200.00

$34,984.50

$34,785.50

$34,894.50

A project should be accepted if its internal rate of return exceeds:

the company’s required rate of return.

the rate the company pays on borrowed funds.

zero.

the rate of return on a government bond.

Answer 1

Future value = Present value * ( 1 + r )^n = 10000 * ( 1 + 11% )^12

34984.50

A project should be accepted if its internal rate of return exceeds the company's required rate of return

Explanation : If the internal rate of return exceeds company's required rate of return, then it means that the project is earnings more return that the company's cost of capital and hence it should be accepted.