330. CSO: 2D2b LOS: 2D2a A company is in the process of evaluating a major product line expansion. Using a 14% discount rate, the firm has calculated the present value of both the project’s cash inflows and cash outflows to be $15.8 million. The company will likely evaluate this project further by a. taking a closer look at the expansion’s contribution margin. b. comparing the internal rate of return versus the accounting rate of return. c. comparing the internal rate of return versus the company’s cost of capital. d. comparing the internal rate of return versus the company’s cost of capital and hurdle rate.

2D2A A COMPANY IS IN THE PROCESS OF EVALUATING A MAJOR PRODUCT LINE E...

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330.

CSO: 2D2b

LOS: 2D2a

A company is in the process of evaluating a major product line expansion. Using a 14%

discount rate, the firm has calculated the present value of both the project’s cash inflows

and cash outflows to be $15.8 million. The company will likely evaluate this project

further by

taking a closer look at the expansion’s contribution margin.

comparing the internal rate of return versus the accounting rate of return.

comparing the internal rate of return versus the company’s cost of capital.

comparing the internal rate of return versus the company’s cost of capital and

hurdle rate.