Fiona Acquisition, Inc., is considering the purchase of Kingbet Company. The acquisition would require an initial investment of $190,000, but Fiona's after-tax net cash flows would increase by $30,000 per year and remain at this new level forever. Assume a cost of capital of 15 percent. Should Fiona take the action to buy Kingbet using above information? —

单选题 编号：2692721

1. Fiona Acquisition, Inc., is considering the purchase of Kingbet Company. The acquisition would require an initial investment of $190,000, but Fiona's after-tax net cash flows would increase by $30,000 per year and remain at this new level forever. Assume a cost of capital of 15 percent. Should Fiona take the action to buy Kingbet using above information?

A.Yes,because the NPV ＝ $10,000.
B.No,because k ＞ IRR.
C.Yes,because the IRR ＞ the cost of capital.

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