Investment Decision Criteria - NPV and IRR Analysis

Very Hard Capital Budgeting Investment Decision Criteria

XYZ Corporation is evaluating a new project that requires an initial investment of $1.5 million. The project is expected to generate cash inflows of $400,000 annually for the next 5 years. The company's required rate of return is 10%. The management is considering various investment decision criteria to decide whether to pursue this project.

Which of the following statements about the investment decision criteria is most accurate?

The project's Net Present Value (NPV) is positive, indicating that it should be accepted.

The Internal Rate of Return (IRR) for this project will likely exceed the required rate of return.

The Payback Period for this project exceeds the project's useful life.

Hint

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