1. Drummond Corporation is considering making an investment in Project A, which will require an initial cash outlay of $20,000. Project A is expected to generate cash inflows of $6,000 for year 1, $8,000 for year 2, $10,000 for year 3, and $7,000 for year 4. The firm's hurdle rate is 12%. What is the internal rate of return for Project A?
A. 16.98% B. 19.29% C. 21.23% D. 24.76%
2. If an investment project is determined to have a net present value (NPV) greater than zero, the internal rate of return (IRR) is:
A. less than the required rate of return.
B. greater than the required rate of return.
C. equal to the required rate of return.
D. indeterminate, since it depends upon the length of the project.