You have the chance to participate in a project that produces the following cash
flows: c0 =5; 000; c1 = 4; 000; c2 = -11; 000: the internal rate of return is 13%. if
the opportunity cost of capital is 10%, would you accept the offer?
no. you are effectively borrowing at a rate of interest higher than the opportunity cost of
capital. the irr rule works for a stand-alone project if all of the project’s negative
cash flows precede its positive cash flows. this is one of the counter-example, where the
negative cash flows arise during the last periods.

Joe finally found a house for sale that he liked. which factor could increase the price of the house he likes? a. both he and the seller each have a real estate agent. b. a home inspector finds faulty wiring in the house. c. the house has been for sale for almost a year. d. several buyers all want that same house.

You are the manager of a large crude-oil refinery. as part of the refining process, a certain heat exchanger (operated at high temperatures and with abrasive material flowing through it) must be replaced every year. the replacement and downtime cost in the first year is $165 comma 000. this cost is expected to increase due to inflation at a rate of 7% per year for six years (i. e. until the eoy 7), at which time this particular heat exchanger will no longer be needed. if the company's cost of capital is 15% per year, how much could you afford to spend for a higher quality heat exchanger so that these annual replacement and downtime costs could be eliminated?

Which of the following is a function performed by market prices? a. market prices communicate information to buyers and sellers. b. market prices coordinate the decisions of buyers and sellers. c. market prices motivate entrepreneurs to produce those products that are currently most desired relative to their costs of production. d. all of the above are functions performed by market prices.